Internal control and risk management system
Added on - 09 Oct 2019
Showing pages 1 to 3 of 7 pages
Running head:AUDITING AND ASSURANCEAUDITING ANDASSURANCE
AUDITING AND ASSURANCE1Question(i).Usefulness of internal controls and information systems in identifying the control risks of thecompany.Internal control plays a major role in a company's success. There are many young accountants haveentered into their careers without knowing the importance of internal controllers. Before being anaccountant they should know the main feature of Internal audit that it use to control the internal risksby analyzing the reports and detecting the issues that it may create in the near future.The internal audit is needed for the expansion and for controlling the risks of the company, forstudying the importance we need to understand the need to analyze the extent of an internal controlsystem which will be best suited for our business.We need to analyze the environment for controlling and for the assessment of risk, information andthe communication, monitoring and controlling the activities review.Internal control can be described the assertion of financial statement and the controlling activity by itsnature.The internal controllers use to cope with the difficult problems.The good internal control areresponsible for the following factors in resolving the risks of the company:Theyare responsible for the disclosure of the accounts transactions whether they are disclosedproperly at the end of the financial year or even keep the check at every month on the financialstatements which use to help the company in their disclosuresTheyuse to check the control on the transactions, i.e., only the authorized and validtransactions are being processed due to which they don’t get any issues in future, when theaccounts are being checked by the external auditors.Theyshould make sure that are liabilities should be very less than the assets of theorganization or assets are the rights of an organization and liabilities are the obligations of it asper the date mentioned they should be received.
AUDITING AND ASSURANCE2The transactions should be completely processed so that there is no issue for the provision ofthe debtor or creditors to the large extentTransactions should be valued accurately by using the specified rules mentioned in thescientific rules of finance and accountancy.Activities of the internal controllersmay include:Separation of the authorization, recording the roles to prevent fraud by any of the people.Some transactions are being reviewed by an appropriate personMaintaining the transactions that will surely suit to an organization (Schroeder, J. H.,2015)Internal controllersplay and important role in the prevention of the frauds and for anymisappropriation.Theyare required to perform a fraud risk assessment and use to access therelated controls.Their objectiveis to provide the reliable reports, compliance with the law, andto follow the policies and procedure as per the accounting standards in recording thetransactions. This is the important aspect through which the resources are monitored, directedand measured. (Peltier, T. R.,2016)The unit of information system develops an understanding of internal as well as theoperational control and most importantly the knowledge of the organization which is basicallyrelates to the IS (information system) audit and assurance. Individuals can examine the risksassociated using the frameworks that provides guidelines, standards, tools and techniques forthe IS audit and control. This tools is developed for the better understanding of inherent risk,controlling the risks and for the detection of risk. This IS also includes the critical analysisskills in information management, problem solving skills in the identification of the relevantinformation, interpreting the output in the multidisciplinary environment or in the skills ofnegotiation.Theyuse to detect the fraud and try to protect the firm both assets (tangible assets) as well asthe intangible assets like reputation and the intellectual property rights like trademarks.