Power Point Presentation Develop a slide show providing general information to your colleagues about the component of internal control from the COSO framework you wrote about in your final project rep

Running Head: INTERNAL CONTROL 0

Components of Internal Control

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Internal Control

Components of internal control are procedures and policies used in organizations by management and employees to ensure integrity. These components include; control environment, risk assessment, control activities, information & communication and monitoring. Their main objectives are to ensure, accuracy & validity, authorization, completeness, maximum security, duty segregation and error management.

Risk assessment being one of the components is a process of identifying possible risks within the organization and weighing their possibilities to occur. During the assessment, tests may be done. These tests map the predicted risks to the internal controls and they also show existing gaps between the two- controls & risks. For every successful transaction done or intended, an assessment for control risks is done to detect, correct & prevent possible fraud activities. Risk assessment is also a legal requirement that aids to bring about control and safety by reasonably handling situations. The assessments done are used to rank risks based on how critical they seem. This is done so that resources may be allocated according to priority. This component has five main steps; identification of risks, identifying victims, taking precautions, recording & implementing findings, reviewing the assessment.

In the process of assessing the risks, fraud reports may be made. These reports act as vital tools that are very useful to provide descriptive information on cases of theft. (Brasel, Hatfield, Nickell & Parsons,2019) Other than that the process also creates boundaries that prevent such happenings. For the reports to be made, organizations sign up with licensed fraud detecting examiners who give the examination programs. These processes aid in defining an organization’s future- building trust, proper planning, accountability etcetera.

The interaction of risk assessment with other components is important for governance (Chan,Chen & Liu,2020)Once the risks are known, a framework is required for feedback and monitoring hence supporting the process and creating room for objective and strategy establishments and hypothetically measuring the success of the organization.

References

Brasel, K. R., Hatfield, R. C., Nickell, E. B., & Parsons, L. M. (2019). The Effect of Fraud Risk Assessment Frequency and Fraud Inquiry Timing on Auditors' Skeptical Judgments and Actions. Accounting Horizons, 33(1), 1-15.

Chan, K. C., Chen, Y., & Liu, B. (2020). The Linear and Non-Linear Effects of Internal Control and its Five Components on Corporate Innovation: Evidence from Chinese Firms using the COSO Framework. European Accounting Review, 1-33.