Question

Explain what negative implication would be for general organizational risk and specifically for financial statement risk and propose a solution for each issue.

- you may need to design an alternative system that employs documents, assigns tasks to certain people when developing your solition.

Answer 1

1. Organizational Risk- Absence of policy may result in unethical behavior or suspected fraudulent behavior and may not be reported to management. This is the negative implication one that organization may face. There should be a control devised which is a solution to mitigate this risk which also involves assigning responsibility to the people and preparation of documents when needed.

Whistle - Blowing Policy

Raising Concern policy is established to encourage all its employees to raise concerns regarding any suspected malpractice within company in a controlled and secure environment and to do so without fear of retaliation, provided any such reports are made without malice and in good faith.

This policy is applicable to our employees (whether permanent or temporary)

This Policy is owned by the policies department and is reviewed and updated at a minimum of annually. The Policy must be approved by the board of directors annually and/or when changes are made to the Policy.

This Policy is available on company intranet and accessible to all the employees.

Raising Concern Committee (composed of Legal and HR) has been established to govern the policy and to monitor the investigations carried out for the complaints reported through web-portal and hotline.

In the above control the policy is the document and HR, Board of directors has been assigned responsibilities.

2. Financial Statement Risk- Accuracy of the Profit and Loss account

The control is below

Financial Managers are responsible for reviewing the Profit and Loss variance on a monthly basis and identifying any corrections/adjustments to be made. Any changes required in P&L is communicated to the Accounting Team. The necessary entries are posted by accounting team on receipt of confirmation from the financial managers.