Risk-Based Approach to Internal Audit Planning in the Bank

Yaroslav Dmyshko
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Yaroslav Dmyshko: Lviv Polytechnic National University, Lviv, Ukraine

Oblik i finansi, 2024, issue 2, 100-105

Abstract: A vital role in the effective management of banking institutions is played by internal audit as an essential element of the risk management system, which ensures timely detection and resolution of problems, increases transparency and trust in the banking system, and ensures its stability and sustainability. The article aims to reveal the main criteria for risk assessment in the areas of internal audit, which is carried out in the bank based on a risk-based approach, to identify the main problems and substantiate the theoretical aspects of integrating a risk-based approach into practice. The role of internal audit in risk management of banking activity was revealed. Arguments were presented regarding implementing a risk-based approach to internal audit planning in the bank. The article analyzes the audit planning procedures and systematizes risk assessment criteria in audit areas. To determine the priority of audit areas, evaluating each area according to the specified criteria and distributing them according to the degree of risk is necessary. This will allow effective planning of audits, directing resources to the most risky areas. The study results indicate that audit planning in Ukrainian banks should be based on a comprehensive assessment of risks, which will allow for the taking into account internal and external factors. As a result, banks can quickly respond to changes in the external and internal environment and effectively allocate resources. To implement this task, it is necessary to develop a detailed audit plan based on a comprehensive risk assessment, and it is necessary to include all key business processes and bank organizational units. Constant monitoring of risks will allow for quick changes to the audit plan in response to new threats or opportunities. The theoretical and practical principles of audit planning based on a risk-based approach, presented in the article, are the basis for building a banking risk assessment model.

Keywords: internal audit; risk; risk-based approach; bank; planning; risk assessment; audit space; criteria; segment (search for similar items in EconPapers)
JEL-codes: C13 D81 G21 M42 (search for similar items in EconPapers)
Date: 2024
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http://www.afj.org.ua/en/article/1069/ (text/html)

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Persistent link: https://EconPapers.repec.org/RePEc:iaf:journl:y:2024:i:2:p:100-105

DOI: 10.33146/2307-9878-2024-2(104)-100-105

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