annals of the university of petroÅani â¼ economics â¼ vol. xi - part i ...

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220 Răvaş, B. proactive role supplements traditional assurance activities with a consultative approach to improving fundamental processes. If such assistance exceeds normal assurance and consulting activities conducted by infernal auditors, independence could be impaired. In these situations, internal auditors should comply with the disclosure requirements of the Standards. A proactive role in developing and managing a risk management process is not the same as an "ownership of risks" role. In order to avoid an "ownership of risk" role, internal auditors should seek confirmation from management as to its responsibility for identification, mitigation, monitoring, and "ownership" of risks. In summary, internal auditors can facilitate or enable risk management processes, but they should not "own" or be responsible for the management of the risks identified Internal auditors may be charged with the responsibility for providing assurance to management and the audit committee on the adequacy of the tourism unit's risk management processes, This responsibility would require the auditor to formulate an opinion on whether the tourism unit's risk management process is sufficient to protect the assets, reputation and ongoing operations of the tourism unit. These sugestions could provide guidance on the major risk management objectives that the auditor should consider in formulating an opinion on the adequacy of the tourism unit's risk management process. This practice advisory covers only the assessment and reporting of the effectiveness of the tourism unit's risk management process. Other Practice Advisories will address controls and consulting issues in greater depth. This advisory recognizes that an tourism unit's risk management process is an important business process that can and should be evaluated in a manner similar to other strategically important processes. Developing assessments and reports on the tourism unit's risk management processes is normally a high audit priority. Evaluating management's risk processes is different than the requirement that auditors use risk analysis to plan audits. However, information from a comprehensive risk management process, including the identification of management and board concerns, can assist the internal auditor in planning audit activities. Each tourism unit may choose a particular methodology to implement its risk management process. The internal auditor should determine the methodology is understood by key groups or individuals involved in corporate governance, including the board and audit committee. Internal auditors must satisfy themselves that the tourism unit's risk management processes address five key objectives to formulate an opinion on the overall adequacy of the risk management processes. The five key objectives of a risk management process are: risks arising from business strategies and activities are identified and prioritized. management and the board have determined the level of risks acceptable to the tourism unit, including the acceptance of risks designed to accomplish the tourism unit's strategic plans. risk mitigation activities are designed and implemented to reduce, or otherwise manage, risk at levels that were determined to be acceptable to management and the board.
The Role of the Internal Audit in the Tourism Unit’s Risk … 221 ongoing monitoring activities are conducted to periodically reassess risk and the effectiveness of controls to manage risk. the board and management receive periodic reports of the results of the risk management processes. The corporate governance processes of the'tourism unit should provide periodic communication of risks, risk stratigies, and controls to stakeholders. Internal auditors should recognize that there could be significant variations in the techniques used by various tourism units for their risk management practices. Risk management processes should be designed for the nature of an tourism unit's activities. Depending on the size and complexity of the tourism unit's business activities, risk management processes can be: formal or informal quantitative or subjective embedded in the business units or centralized at a corporate level. The specific process used by an tourism unit must fit that tourism unit's culture, management style, and business objectives. For example, the use of derivatives or other sophisticated capital markets products by the tourism unit would require the use of quantitative risk management tools. Smaller, less complex tourism units may use an informal risk committee to discuss the tourism unit's risk profile and to initiate periodic actions. The auditor should determine that the methodology chosen is both comprehensive and appropriate for the nature of the tourism unit's activities. Internal auditors should obtain sufficient evidence to satisfy themselves that the five key objectives of the risk management processes are being met in order to form an opinion on the adequacy of risk management processes. In gathering such evidence, the internal auditor should consider the following types of audit procedures: research and review reference materials and background information on risk management methodologies as a basis to assess whether or not the process used by the tourism unit is appropriate and represents best practices for the industry. research and review current developments, trends, industry information related to the business conducted by the tourism unit, and other appropriate sources of information to determine risks and exposures that may affect the tourism unit and related control procedures used to address, monitor, and reassess those risks. review corporate policies, board, and audit committee minutes to determine the tourism unit's business strategies, risk management philosophy and methodology, appetite for risk, and acceptance of risks. review previous risk evaluation reports by management, internal auditors, external auditors, and any other sources that may have issued such reports. conduct interviews with line and executive management to determine business unit objectives, related risks, and management's risk mitigation and control monitoring activities. assimilate information to independently evaluate the effectiveness of risk mitigation, monitoring, and communication of risks and associated control activities.
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