Why the Risk Based Internal Audit is so important

For many years Internal Audit considered itself as being solely involved in the controls and processes as they relate to the financial transactions of the firm. Often the internal audit function was considered as part of the review and inspection process in the business. In a way internal auditors often saw themselves and in-house versions of the external variety.

Internal audit did not start out that way. Years ago when I formally studied the subject at university the internal audit ‘bible’ was ‘The Practice of Modern Internal Auditing’ by Lawrence B. Sawer (published by the Institute of Internal Auditors, Inc. originally in 1973). This highly knowledgeable tome of almost 900 pages covered the full ambit of internal auditing in beautiful detail, with dozens of example of checklists and working specimens. These were examples of day-to-day operational risks across all sorts of industries. A small sample ranges from the audit of a highway transport department (covering equipment maintenance, vehicle dispatching, fuel, parts and repair services and general administration) to control and compliance over a range of branches at a major bank. I could go on-and-on, but I guess that you get the picture.

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