IMPROVING THE RISK-BASED METHODOLOGY FOR PREPARING ANNUAL INTERNAL AUDIT PLANS IN THE PUBLIC SECTOR

This article develops a risk-based methodology for preparing annual internal audit plans in the
public sector. The study addresses the limited differentiation of audit objects and the allocation of audit resources
according to assessed risk levels in existing planning practices. Using a systems approach, comparative
analysis and modelling, the proposed methodology classifies audit objects according to the threshold values of
an integrated risk index, allocates audit resources among high-, medium- and low-risk groups in a 60:30:10 ratio,
and provides for the semi-annual updating of risk assessments and the risk map. Scenario-based calculations
indicate that, subject to the assumptions and data used in the model, the methodology may reduce the average
duration of audit engagements by approximately 38 per cent and increase the number of documented audit
findings by approximately 54 per cent. The proposed methodology may serve as a practical planning tool for
public sector internal audit services.