COMPARISON OF AUDIT APPROACHES

CONTROL-BASED PROCES-BASEDS RISK-BASED RM-BASED

AUDITING AUDITING AUDITING AUDITING

Objective Compliance with Effectiveness and Effectiveness of controls Effective of RM activities

underlying guidelines. efficiency of a process. & procedures to to achieve objectives &
mitigate key risks. optimize/mitigate risks
Approach Understand guidelines Compare current process Identify key business Understand obj.,
& audit for compliance. to best practices. risks & evaluate controls identify related risks,
to mitigate the risks understand tolerance
levels, identify perf. &
risks measures, & assess
RM effectiveness
Focus Identify compliance Identify gaps between Identify controls & Identify gaps between
exceptions & errors. the current process & procedures that are not current & desired risks
best practices operating as needed to management
mitigate the key risks. effectiveness
Testing Statistical based Consulting-focused Combination of Combination of
Approach predictive & evaluation of current & substantive & substant. & compliance
substantive tests, with best practices with some compliance tests, tests, focusing only on
some compliance tests. compliance tests. focused only on key risks key objectives & the
related risks

Recommen- Elate exceptions or Relate gaps to specific Relate exceptions or Relate gaps in RM
dation errors to the relevant operational objectives errors to key risks. effectiveness to
guidelines underlying risks & key
business objectives