Risk-based internal audit approach

Abstract

Around the globe, organizations are facing escalating financial, operational, strategic as well as regulatory risks that are increasing gradually in terms of their impact, likelihood, and complexity. And, the whole world is facing such complexities. Corporate governance practices, policies, rules and regulations, financial reporting requirements, as well as operational efficiency, all these factors give fuel to the internal audit functions to generate more values ahead of any past standards. The objective of an internal auditor is to ensure that audit engagements are performed more effectively and efficiently and also that all the key risks of the organization are addressed. At the same time also ensure that the scarce audit resources are used adequately. To achieve such objectives, risk-based internal audit (RBIA) would be a better choice for all auditors across the globe.

The case company, IDLC Finance Limited (IDLC) is practicing RBIA in perform-ing their routine work. It is one of the large local corporate bodies operating in the financial sector of Bangladesh. The company operates under Financial Institutions Act 1993 and also under the direct supervision of Bangladesh Bank. The management as well prepares and maintains the internal rules, guidelines, product wise separate guidelines and policies. All the rules and product program guidelines (PPG) are prepared on the basis of regulatory directives. As a result, a good corporate governance environment has already existed there. Hence, it becomes very easy for the management of IDLC when they decided to adopt RBIA. However, the process is still developing and has some drawbacks as well. But, IDLC management as well as staffs are energetic and enthusiastic regarding setting benchmarks and working on creating a compliant business environment for sustainable growth.