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How to participate in the internal audit risk management

Abstract: Internal Audit is based on the fiduciary responsibility to the needs of the economy and development together is the product of decentralized management. Internal audit in enterprise risk management is the trend of its development. This paper analyzes the internal audit in enterprise risk management reasons, methods, and internal audit how to more effectively participate in corporate risk management recommendations.
Key words: internal audit risk management in enterprise risk management, internal audit work is the development trend of internal audit, in June 1999, the IIA Council will included in the new definition of internal audit, and in 2001 will write a new definition of New definition that: traditional management to focus on the individual control system and operating mechanism, but stressed the overall management of the modern management concept, the overall management control systems and organizations linked to the long-term goals,[link widoczny dla zalogowanych], evaluate and improve risk management, control and governance process, will inevitably become an important responsibility of internal audit. This paper from China Union [link widoczny dla zalogowanych] collected. Internal audit in enterprise risk management reasons (a) of the internal audit department with its own development needs of civil audit growing competition, the traditional appraisal business has not bring more profits to the firm, the firm urgently seeking new business to maintain its own survival and development in the enterprise's internal management is an important expansion of its business content,[link widoczny dla zalogowanych], while the firm has the experience and the cost of the existence of on the edge, so there are a considerable number of companies choose to outsource internal audit. This will bring the internal audit department to the enterprise a lot of pressure, the internal audit department wanted to develop,[link widoczny dla zalogowanych], they need to find different ways of living, for the organization to provide unique value-added services, and in the enterprise risk management is an appropriate choice. Risk management, internal audit through participation, to fully assess the business opportunities and risks, even in the case of the Board to allow development of risk management strategies, which would make the internal audit services from the traditional passive way to change the mode of active service, and thus make The internal audit department become an important role. (B) the characteristics of the internal audit department to determine their participation in risk management for recent years, the firm continued to expand, in the enterprise risk management is one of the major business. While the more experienced professional firms, there may also be cost advantages, however, the internal audit department to participate in the enterprise risk management has the advantage of unmatched firms, because the internal audit department will be more familiar with the enterprise business culture, development strategy, internal control, operating management tools, the duties and authority of the department, with its own interests and the development of enterprises is also unity, so the internal audit staff for participation in risk management, achieve business goals will be more strongly sense of responsibility, these differences will make up for their lack of experience. Therefore, the internal audit department is more suitable than the firms involved in the enterprise risk management. Risk within the enterprise has the infectious, transmission and other features, that is, the risk posed by a department may be transferred to another department, and ultimately make the whole enterprise into a dilemma. It is for this reason, corporate risk management should be for up to consider a whole, rather than from individual business units to consider corporate risk management department is specialized department, it can do this. However,[link widoczny dla zalogowanych], the risk management department under the management department, its independence is not strong enough, a lot of opinions is sometimes necessary to yield to management pressure. The modern enterprise independent of the internal audit department and management department, they can be more independent assessment of risk and recommendation submitted directly to the Board, the proposal would be more authoritative. Internal audit in enterprise risk management approach risk of environmental analysis. Analysis of the environment in the process of enterprise risk, internal audit departments need to evaluate the enterprise's development strategy, business plan meets the internal and external environment changes, because changes in internal and external environment will bring about corresponding changes in risk. In addition, changes in macroeconomic policy, trade policy changes, as well as upstream and downstream changes in business conditions will be operation of the business risk, financial risk impact. Therefore, the internal audit staff need to analyze the changes in internal and external environment, to further consider the corporate risk management measures to adapt to the new situation, and results of the analysis submitted to the relevant departments. Risk confirmed. Risk identification is to occur in a variety of risk before the occurrence of these risks and the reasons for the type of judge, in order to achieve the valuation and treatment of risk. The internal audit department within the enterprise not only to clear the external environment, what risks exist, but also to identify the reasons for these risks. Internal auditors can use generic risk analysis template and other methods to identify their own risks and risks related to the subject. For internal risk identification, such as the blind expansion of the company's financial risk to the enterprise, through access to relevant financial reporting and related contracts to be confirmed; because employees do not follow the operational risk arising from operation, you can look at internal control system or the work of field observations to confirm. For outside the enterprise risk identification, such as the market changes, changes in political environment brought to the enterprise market risk, financial risk, political risk, use of these risks can be listed out one by one, and then through the fault tree, Delphi identify the reasons causing these risks. Risk assessment. Risk assessment is the risk events that have been identified for qualitative analysis or quantitative analysis to assess the likelihood of an event and the impact. The assumption that risk can be measured under the premise of the one hand, the task of risk assessment is to estimate the probability of occurrence of a risk, the other is predicting the risk of losses, when the internal audit staff can use probability and statistical methods for risk valuation. However, many cases, the risk is not easily measured by mathematical methods,[link widoczny dla zalogowanych], it requires subjective judgments the likelihood of different outcomes, then internal auditors need to use their experience, from an objective point of view of risk assessment, and then with professional views. In addition, the internal audit staff the results of risk assessment need to re-test to determine the appropriateness of risk assessments that do not need to be properly amended.