Internal Auditing and Risk

Joseph Ginossar, CPA (Isr.)
Fahn Kanne Control Management Ltd.

Have you identified the risk areas in your firm? Do you have the appropriate controls to keep these risks in check? Do your employees follow Company procedures?

Good internal auditing such as the kind that we provide, high-quality, professional service with the personal and ongoing involvement of the partner in charge, can ensure that the answers to the above questions are positive.

As the largest and leading providers of internal auditing services in Israel, we have developed unique techniques that assist us in conducting our work in a very efficient manner.

We present below our firm's unique five-stage method:

1. Risk Based Issues Assesement

Risk Based Issues Assesement is a powerful tool used to map the audit table issues in the organization. This assessment is required of internal auditors by western professional standards. Our firm is the Israeli leader in conducting risk assessments.

The Risk Based Issues Assesement method is based on research studies that identified risk factors that exist in parallal to actual problems in organizations.

The Risk Based Issues Assesement's real strength is that very often, it will assist management in identifying previously unnoticed audit issues. Sometimes, we will decide jointly with the client, for a variety of reasons, not to conduct a risk assessment or to postpone it. In such cases, work will commence directly with the next stage.

2. Planning

In order to maximize the benefit derived from the internal auditor, the work plan formulated jointly with the client focuses on areas in which cost savings can be achieved efficiently. When a Risk Based Issues Assesement is conducted, it is also possible to prepare a multi-year audit plan.

3. Conducting the actual assessment

Good internal auditing must be objective. Therefore, our examination is based on independent sampling and testing. When examining large data bases, we use special audit software.

4. Reporting

For the audit to be effective, and to have its recommendations implemented, it is imperative to involve the relevant executives of the organization. We do this throughout the audit process, without compromising its independent nature. This approach creates a willingness on the part of the executives to carry out the recommendations of the audit. As a result of this unique reporting method, management is presented with an audit report which, in most cases, is undisputed and which can be immediately implemented.

5. Checking the implementation of our recommendations

Following our report, management makes certain decisions regarding changes it would like to carry out in the organization. After a specified period of time, we will measure for management the degree of adherence to its decisions and submit a report on our findings.