Why You Should Take a Risk-Based Audit Approach
The continuous growth of compliance demands and the heightened risk in most organizations’ operations are putting an immense pressure to audit teams and their resources. This is why the risk-based audit approach has become a valuable tool for organizations today. The value of auditing can be shown in the improvement in internal control and the ability to minimize the risks and its impact to an organization.
While the traditional audit approach still brings value to organizations, it also has become insufficient due to its reactive nature, silo-based processes, and risk oversights.
Risk-Based Audits vs. Traditional Audits
Risk-based audits focus on known or perceived vulnerability and risks, with the highest risk as its top priority. On the other hand, traditional audits typically involves carrying out audit that are scheduled and routine which may not even cover the most important risks. Instead of focusing on area-by-area approach, risk-based audits target specific concerns and identifies these as low, medium, or high risk enabling audit teams to devote their resources to areas displaying potential risks. It is performed more frequently, as necessary and on unscheduled times.
Ultimately, the key difference between traditional audits and risk-based audits boils down to the scope and methodology.
Benefits of Risk-Based Audits
The risk-based audit approach provides protection to organizations by targeting perceived and known areas of risk. Furthermore, it provides organizations the following benefits:
- It enables the auditors to focus on identifying risks and allows the management to make better decisions and put appropriate internal controls to ensure quality performance.
- It gives a better understanding of risks and its actual impact.
- It helps the management in deciding what risks to prioritize first.
- It drives better allocation of resources.
- It guarantees a higher likelihood to attain business objectives.
Using Rapid Audit to Support Your Risk-Based Audit Approach
With the heightened risks organizations face and the little time available for conducting audits, it is critical for organizations to deploy their audit resources effectively by focusing on the areas that pose great risks. This is why risk-based auditing is proven to be an effective method.
As a risk-based audit tool, Rapid Audit empowers users in conducting effective and less time consuming risk inspections through a digital platform. With Rapid Audit, you can convert your paper-based audit and inspection forms to interactive and smart digital forms.
Reports can be viewed in real-time – this enables immediate detection of critical areas so corrective actions can be assigned right away.