Analysis of the Risk in the Process of Internal Audit

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ANALYSIS OF THE RISK IN THE PROCESS OF INTERNAL AUDIT

CRISTIAN DRAGAN

Constanta Maritime University, Romania

ABSTRACT

Risk analysis has become in recent years an increasingly widespread practice in all fields, sering inchoosing ario!s possible options within them" #acro models for eal!ation hae been deeloped,incorporating models for managerial options, being comple$ interactions between these components andfeedback relationships" In these conditions eery manager is enco!raged to become its own risk manager"

1. INTRODUCTION

2.

• Risk analysis is a process in which gross

risks res!lting from risk identification process are gro!ped, filtered and prioriti%ed" The p!rpose of this actiityis to proide detailed descriptions oforgani%ation risk, so that scenariosconcerning the higher risks and theactions most appropriate for risk control

can be planned and implemented in thene$t step of the risk management cycle"

• Risk analysis is a dynamic and actie

process thro!gh which the risks areidentified, analy%ed and eal!ated, sothat they can proide a basis for f!t!remanagement decisions"

• Risk analysis is not an e$act science" &yestablishing control actiities, risks areaimed to become medi!m or low, to

e$tinction" 'oweer the risks m!st()eole)) downwards"

*" Analysis + assessment of risk is animportant stage in the actiity ofa!ditors and it is performed for

- Deeloping a plan and an a!dit program- -stablishing a!dit ob.ecties

- preparing, !pdating, assessment of therisk register

/"5. RISK ASSESSMENT

METHODOLOGY FOR

PREPARING THE INTERNAL

AUDIT PLAN

0" Internal a!dit is an actiity plan based on risk assessment tttached to

a!ditable actiities, according to law" 1nderthese circ!mstances, p!blic entitieselaborate a m!ltiann!al plan *23 years toa!dit all departments + actiities + f!nctions + programs within the entity of which isallocated to the ann!al internal a!dit plan"4or each mission in the ann!al work plan isdeeloped an interention program on thespot by the team of internal a!ditors"

5" Risk analysis is a ery important

proced!re !sed in internal a!dit missions,for identifying actiity risks deeloped in anorganisations that can affect the performanceof achieing its basic goals" &ased onanaly%ing the risks, internal a!ditors willa!dit only those actiities with a high risk, possible with medi!m risk, in the process of


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risk analysis cond!cted in preparation of aninternal a!dit mission"

6" In this material is deeloped arisk assessment methodology for the preparation of internal a!dit, in accordancewith the reg!latory framework in force inRomania, establishing the n!mber of !nits to be a!dited ann!ally depending on the riskanalysis, depending on each entity that it isto be a!dited, based on the same proced!reof risk analysis "

7" &asedand on risk assessmentof the risks associated with the a!ditedactiities, it was established an order of

priorities of the internal mission a!dit basedon the risks that will come in a!diting andwhich will be reflected in the internal a!dit plan for the c!rrent year"

10. ESTABLISHING THE NUMBER OF

UNITS THAT WILL BE EXAMINED

BASED ON THE RISK ANALYSIS

88" 9ithin the competence there are*: p!blic !nits 2 tertiary a!thori%ingofficers and ann!ally may not be heardmore than 8: entities, d!e to fewera!ditors hired to a!dit"

8;" 4rom this point of iew it isnecessary, based on a risk analysis to be performed, 8;!nitis with high andmedi!m risks m!st be selected ,depending on the risk criteria that aretaken into consideration within thisanalysis" The method !sed for analy%ing

risks is the matri$ method ofappreciation, starting from theappreciated risk criterias their weights"

8*" The stages will be as follows

a" -stablishment of criteria or riskfactors for the !nit"

8/" In this case, the risk criteria C;

• the period of a!dit2 the

date of the last a!dit2C*

• e$isting departments

reported to theappropriate entity and

a!diting areas 2 C/• the e$istence of

?!alified h!manreso!rces > C3

• the entity that will bea!dited m!st proidematerials andcalc!lation techni?!esneeded foor soling thetasks2 C0

• comple$ity and ol!me

of tasks performed2 C5• the n!mber of persons

employed to performthe work tasks 2C6

• the inolement of

general managers in proiding for the hiredstaff so they canaccomplish in goodconditions their work2

C7• the e$istence of a

re?!est from the !nit for a!diting before the termof * years > C8:

b" Score attrib!tion


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based on e$isting data , thescore is from 8 to 8::"83" 4or each risk criteria arisk percentage is established >for e$ample for C8 they gie @8

!p to C8: to @8:c" Attrib!tion of grade from thea!ditors


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*0" Table concerning the selection criteria for determining necessary risks of the!nits that will be a!dited in the c!rrent year

*5" N

*6" Risk criteria *7" -stablished /:"Attrib!te

d percentage

/8"8

/;" The leel of the a!dits and controls performed on a!dited !nits

/*" //" /:

/3";

/0" Staff fl!ct!ations at the a!dited system /5" /6" 5

/7"*

3:" Time or period of a!diting 38" 3;" *

3*"/

3/" -$isting of ade?!acy in a!ditdepartments

33" 30" 3

35"3 36" the e$istence of h!man reso!rces in thea!dited systems 37" 0:" 0

08"0

0;" the e$istence of material reso!rces in thea!dited systems

0*" 0/" 3

03"5

00" the ol!me and comple$ity of a!ditedsystems

05" 06" ;:

07"6

5:" The e$istence of professionally trained persons

58" 5;" 3

5*"7

5/" The professional inolement of themanagers

53" 50" 0

55"

8

56" the e$istence of re?!ests from a!dited

entities for cond!cting a!dits

57" 6:" *

68" 6;" 6*" Total 6/" 8::

63"

&" Reali%ation of an algorithm for determining the a!dited !nits

60" Algo!"#$" 4or the 8: established criterias on !nitis were attrib!ted specific percentage"

65" Grades were gien to each criterion< 8,;,*=, as follows

66" Grade 8 Signifies a &IG degree of safety and control67" Grade ; Signifies a #-DI1# degree of safety and control

7:" Grade * Signifies a S#AEE degree of safety and control

78" The risks were ?!antified

7;" Interals necessary for establishing risk were set


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7*" Interal 8,::2 8,00 small risk

7/" 8,052;,*/ medi!m risk

73" ;,*32*,:: big risk

70"

75"


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2%&. '. REFERENCES(

;/5" K8L AE&1, IN-E" AUDITUL INTERN ŞI MANAGEMENTUL RISCURILOR" MN TRI&1NA-CN#IC, H" 87, NR" 6, @" 3020:,;::6O;/6" K;L &R&1E-SC1,S-HASTIAN" GESTIONAREA RISCURILOR - FUNCŢIE MANAGERIAL

LA !"# NI$ELUL UNEI ORGANI%AŢII &U'LICE( MN R-HISTA 4INANP-@1&EIC- QI CNTA&IEITAT-, H" 87, NR"/, @" ;/2*:, ;::6O

;/7" K/L &-EIC, AE-SANDAR" RISCUL - COM&ONENT AORGANI%AŢIILOR( MN TRI&1NA-CN#IC, H" 86, NR" ;;, @" ;32;6,;::5O;3:" K3LC'RA4AS, DI#ITRIS N"

MANAGING RIS) IN T*E NE+ ECONOM " N-9 FR N-9 FR INSTIT1T- 4 4INANC-, ;::8O;38" K0LCICI1, CAR#-N

NADIA" MANAGEMENTUL RISCULUI$OL . TEORII, &RACTICI, METODOLOGII( &1C1R-QTI -DIT1RAAS-, ;::6O252.

Analysis of the Risk in the Process of Internal Audit

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