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RISK AND CONTROL, examples, as a result of, Screenshot 2023-04-07 224911,…

- - - - a loss incurred as a result of uncertainties in an economy
        
        changes in the exchange rates
        
        liquidity risk
        
        credit risk
    - - a loss that might arise from an
        unsuccessful business plan
        
        inadequate resources allocation
        
        poor business decisions,
        
        failure to respond changes in business environment
    - - the possibility of a loss that occurred due to internal
      - inadequacies of a firm or a breakdown in its controls, operations or procedure
  - - - capital allocation for preventive maintenance
    - - fraudulent activities, problems with labour union or
        safety of employees.
    - - change in manufacturing process or outsourcing decision.
    - - system downtime or security breaches
  - - - Giving assurance on risk management processes
      - Giving assurance that risks are correctly evaluated
      - Evaluating risk management processes
      - Evaluating the reporting of key risks
      - Reviewing the management of key risks
    - - Facilitating identification and evaluation of risks
      - Coordinating ERM activities
      - Consolidating reporting on risks
      - Maintaining and developing the ERM framework
      - Championing the establishment of ERM
      - Developing risk management strategy for board approval.
    - - Imposing risk management processes
      - Managing assurance on risks
      - Taking decisions on risk responses
      - Implementing risk responses on management‘s behalf
      - Being accountable for risk management
      - Setting the risk appetite
- - - - A commitment to integrity and ethical values
      - The BODs has an oversight function and in independent of management
      - Management establishes structures, clear assignment of authority and responsibility
      - The organisation is committed to hiring competent individuals
      - Every individual is held accountable for the internal control assigned
      - Risk Assessment
        
        4 Principles of risk assessment
        
        The organisation has clear objectives to identify and assess risk
        
        The organisation identifies risk across the entity and analyses risk as a basis to determine how the risk should be managed
        
        The organisation considers the potential for fraud when assessing risk
        
        The organisation identifies and assesses changes that could significantly impact the system of internal control.
        
        Control Activities
        
        Entity wide - ‘tone at the top’, the organisational climate and management philosophy .
        
        Business process level - performance evaluation, reconciliations of accounts and physical inventory counts
        
        Specific transactions - Adequate separation of duties, proper authorisation of transactions and activities, adequate documents and records, physical control over assets and records, independent checks on performance
        
        Information and Communication
        
        Information to support the functioning of internal control must be relevant and of high quality.
        
        All relevant information including objectives and responsibilities of internal controls are communicated internally to enable the functioning of internal control.
        
        The organisation should also communicate to external party regarding matters related to internal control
        
        Monitoring Activities
        
        2 Principles of Monitoring Activities
        
        The monitoring process is carried out to ascertain whether the components of internal control are present and functioning
        
        2 more items...
        
        Can be done on an ongoing basis or on a separate evaluation basis or a combination of the two
        
        A separate evaluation occurs based on management’s requests