Abstract

This article demonstrates auditing's role in risk management. When applying a risk-based approach, you must look at risk when structuring the audit program, as well as consider risk when planning, executing, reporting and closing individual audits. Applying a risk-based approach to auditing also enhances the audit program’s performance and contributions. The tools decision tree, 2 x 2 risk matrix, Pareto diagram and risk rating demonstrate how risk and audits intersect. An example of conventional vs. risk-based auditing shows how risk-based auditing can provide greater value to the organization.