AAF8
Syllabus A: Audit Framework And RegulationA3. Corporate Governance

A3f. Internal Controls & Risk Management

Syllabus A3f)

Explain the importance of internal control and risk management.

Internal controls cannot eliminate risk, but they can minimise it.

Internal controls help:

  1. Safeguard the assets of the company

  2. Prevent and detect fraud

  3. Safeguard the investment of the shareholders

They are designed to minimise the risk of fraud and error

and will include such procedures as:

  • Carrying out regular reconciliations on key ledgers

  • Keeping assets under lock and key

  • Passwords and computer system security