🥇 Steps in a Risk-Based Technique for Internal Audits
What Is a Risk-Based Audit?
A risk-based audit is different from a traditional audit. In a traditional audit, the auditor only tests accounts to see if they are right. But in a risk-based audit, the auditor focuses on risks in the business. This method links the company’s risk levels to the internal audit plan. It does not just look at numbers but checks all the big risks the business faces. Auditors use this way to help the company improve and focus on important goals. The highest risks always get the most attention in this method.
Why Do Companies Use a Risk-Based Audit?
Companies use this technique because it helps them find and fix risks fast. It also lets them plan better. For example, some Greek banks used only the old audit method. They checked accounts and branches but missed some important risks. The old method did not cover everything. That’s why businesses now use the risk-based method for better results.
What Are the Steps in a Risk-Based Internal Audit?
Let’s break down each step with simple language and examples.
Step 1: Understand and Identify Risks
The first step is to understand all the risks in the business. The auditor studies the business and sees how it works. They check the company’s risk framework, the way people work, and the rules they follow. The auditor uses tools like observation, testing, and note-taking. This step is very important because knowing the risks comes before making any plan.
Step 2: Assess and Judge Risks
The next step is for the auditor to assess the risks found earlier. The auditor uses their skills to see where the biggest risks are. They study how big the risk is and what could happen if the risk turns into a problem. The auditor uses judgment and looks at company history. This step helps the company see which risk is small and which is large.
Step 3: Perform the Audit and Manage Risks
The last step is to track any changes in risks. Risks can change when the business grows or faces new situations. The auditor keeps an eye on new risks and reviews if old problems are fixed. This step is about following up and making sure everything stays safe and up-to-date.
Now, the auditor starts the actual work. The audit plan is put in action. The auditor checks all parts of the business, but spends more time where the risks are highest. Low-risk areas don’t need as much checking. After finishing this work, the auditor writes a report about problems or weaknesses they saw.
Step 4: Track Changes and Follow Up
Why Is This Method Useful for a Business?
Risk-based internal audits give many benefits to businesses. Here are some reasons why companies choose this method:
- It saves time and money by focusing on real risks.
- It helps management find weak spots early.
- It supports company goals by keeping big risks under control.
- It lets the business adjust quickly to new problems.
Read More: Tips to Avoid Internal Audit Mistakes in Dubai, UAE
How Mubarak Al Ketbi (MAK) Auditing Can Help
Mubarak Al Ketbi (MAK) Auditing is your trusted partner for risk-based internal audits in Dubai and the UAE. Our expert team knows how to find risks and solve them quickly. We help every client set up a safe and strong audit process that fits their business. Remember, “a stitch in time saves nine”—let our team help you fix problems before they grow.
- For more information, visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates - Or contact/WhatsApp: +971 50 276 2132
