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Financial Controllership: Presented by

Financial controllership is a management function that supervises accounting and financial reporting. It is responsible for implementing and monitoring internal controls. Risk is the threat that events could negatively impact business objectives. The risk assessment process involves identifying, sourcing, and prioritizing risks. Key risk strategies include mitigation, acceptance, avoidance, limitation, and transference. Internal controls are policies and procedures implemented to reduce risks and ensure the integrity of financial reporting.

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Eloisa Monato
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394 views19 pages

Financial Controllership: Presented by

Financial controllership is a management function that supervises accounting and financial reporting. It is responsible for implementing and monitoring internal controls. Risk is the threat that events could negatively impact business objectives. The risk assessment process involves identifying, sourcing, and prioritizing risks. Key risk strategies include mitigation, acceptance, avoidance, limitation, and transference. Internal controls are policies and procedures implemented to reduce risks and ensure the integrity of financial reporting.

Uploaded by

Eloisa Monato
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Financial

Controllership
Presented by:
Jairus Kent B. Sanchez
Definition
(Financial Controllership)

It is a management function


that supervises the accounting
and financial reporting of an
organization. It is responsible in
the implementation and
monitoring of internal controls.
What about
Risks?
For all businesses there are
risks that exist and that
need to be identified and
addressed in order to
prevent or minimize losses.
What is Risk?
Risk is the threat that an
event, action, or non-action
will adversely affect an
organization’s ability to
achieve its business objectives
and execute its strategies
successfully. Risk is measured
in terms of consequences and
likelihood.
Process of
Assessing Risks

Identifying Sourcing Prioritizing


Risk Risk Risk
Risk Strategies
Mitigation
Acceptance
Avoidance
Limitation
Transference
What is Risk
Mitigation?

It is the taking steps to reduce


adverse effects.
What is Risk Acceptance?
Risk acceptance does not reduce any
effects however it is still considered a
strategy. This strategy is a common
option when the cost of other risk
management options such as
avoidance or limitation may outweigh
the cost of the risk itself. A company
that doesn’t want to spend a lot of
money on avoiding risks that do not
have a high possibility of occurring will
use the risk acceptance strategy.
What is Risk
Avoidance?
Risk avoidance is the
opposite of risk acceptance.
It is the action that avoids
any exposure to the risk
whatsoever. Risk avoidance
is usually the most expensive
of all risk mitigation options.
What is Risk
Limitation?
 Risk limitation is the most common risk
management strategy used by
businesses. This strategy limits a
company’s exposure by taking some
action. It is a strategy employing a bit of
risk acceptance along with a bit of risk
avoidance or an average of both. An
example of risk limitation would be a
company accepting that a disk drive
may fail and avoiding a long period of
failure by having backups.
What is Risk
Transference?
 Risk transference is the involvement of
handing risk off to a willing third party. For
example, numerous companies
outsource certain operations such as
customer service, payroll services, etc.
This can be beneficial for a company if a
transferred risk is not a core competency
of that company. It can also be used so a
company can focus more on their core
competencies.
Risk Considerations
 Evaluate the nature and types of errors and omissions that
could occur, i.e., “what can go wrong”
 Consider significant risks (errors and omissions) that are
common in the industry or have been experienced in prior
years
 Information Technology risks (i.e. - access, backups,
security, data integrity)
 Volume, size, complexity and homogeneity of the
individual transactions processed through a given account
or group of accounts (revenue, receivables)
 Susceptibility to error or omission as well as manipulation or
loss
 Robustness versus subjectiveness of the processes for
determining significant estimates
 Extent of change in the business and its expected effect
 Other risks extending beyond potential material errors or
omissions
Internal Controls
•Policies, procedures, practices and
organizational structures implemented to
reduce risks

• Classification of internal controls


 Preventive controls
 Detective controls
 Corrective controls
Classification of Internal
Controls
 Preventive
 Detect problems before they arise
 Monitor both operation and inputs
 Attempt to predict potential problems before they
occur and make adjustments
 Prevent an error, omission or malicious act from
occuring
 Detective
 Use contols that detect and report the occurrence
of an error, omission or malicious act
 Corrective
 Minimize the impact of threat
 Remedy problems discovered by detective controls
 Correct errors arising from a problem
Internal Control
Objectives
Internal control system
Internal accounting controls
Operational controls
Administrative controls
Internal Accounting
Control
 Internal controls are the mechanisms,
rules, and procedures implemented by a
company to ensure the integrity of
financial and accounting information,
promote accountability, and prevent
fraud. Besides complying with laws and
regulations and preventing employees
from stealing assets or committing fraud,
internal controls can help improve
operational efficiency by improving the
accuracy and timeliness of financial
reporting.
Operational
Control
 are designed to ensure that day-to-day
actions are consistent with established plans
and objectives. It focuses on events in a
recent period. Operational control systems
are derived from the requirements of the
management control system.
 Corrective action is taken where
performance does not meet standards. This
action may involve training, motivation,
leadership, discipline, or termination.
Administrative
Control
work procedures such as written
safety policies, rules, supervision,
schedules, and training with the goal
of reducing the duration, frequency,
and severity of exposure to situations.
Internal Control
Objectives
 Internal control objectives
 Safeguarding of IT assets
 Compliance to corporate policies or legal requirements
 Input
 Authorization
 Accuracy and completeness of processing of data
input/transactions
 Output
 Reliability of process
 Backup/recovery
 Efficiency and economy of operations
 Change management process for IT and related systems

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