Annals of the University of Oradea: Economic Science (Jul 2010)
RISK MANAGEMENT’S IMPORTANCE AND ROLE IN AUDIT
Abstract
The importance of treating this theme is proved by the current situation that economy and the entities activating on the market are confronted with. Risk is present in all the actions and event of humanity. Risk is in a permanent change, it evolves in complexity, among the traditional exposures to hazard other risks are added: operational, financial, strategic, market, country, legal, human, fraud risks and its complex character can be attributed to a range of factors that are grouped by the specialized literature in macroeconomic factors, also called extern, and microeconomic factors, also called intern. In the last few years, the importance of the corporate governance involvement in risk management is more and more recognized. The organizations are under the pressure of identifying all risks that it is confronted with starting with social risks, ethical and environment risks to those financial and operational, and also to the way it manages them at an acceptable level. In the same time, using integrated risk management procedures and politics at enterprise level (ERM-Enterprise Risk Management) has extended, in this way organizations are admitting the risk management approach advantages. The internal audit, in both his roles of providing assurance and consultancy, contributes to risk management in various ways, its importance being increasing due to the current financial crisis. For the financial auditor the term of risk has other senses, meaning that risks are regarded through the mission type and objectives. But still, identifying and measuring audit risks during the mission’s planning are strong connected to the existing risk management of the entity. In this way, if the audited entity has an implemented risk management that is proved to be efficient, this will represent a starting point for the auditor in evaluating the risks connected to his engagement, meaning that the general audit risk will be lower and the assurance level will be higher. More than that, an efficient enterprise risk management determines a higher level of trust in the internal audit department’s activity.
