Question

Why are internal controls necessary with regard to risk management and what is the role of
Accountants in their development?

Answer 1

Meaning of internal control

Internal controls are developed with the aim of providing management responsible assurance that an organisation business objectives will be achived while at the same time prevents risk,detecting risk and take corrective action.

Meaning of risk management

Risk management is the identification, evaluation and prioritization of risk in a business organization. Risk means uncertinity of loss. Proper management and control of risk is essential for maximising profit,minimising loss ang identifying opportunities.

Proper risk management and internal control help the organization understand the risk the exposed to, put controls in place to counter threats and effectively pursue their objective. They are there for an important aspect of organization's governance , management and operations.

Role of accountants

Evaluating and improving the risk management and internal control is the core competencies function of professional accountants. They can also organise risk management and internal control training session and establish an undestandable common risk and control language that meet prefessional and technical standard.

Accountant should ensure that all the employees in the organisation should be go through the risk management and internal control system in an organisation in order to reduce errors and mistake. Proper internal control will alert the employees while doing their work.

Through proper internal control and risk management an accountant and employees can achieve the goals of organization's easily with less risk and maximum profit. Establishing internal control and risk management are essential for the success of an organisation.