An entity deploys the risk assessment matrix to gauge the extent of a risk and to conclude whether they have apt controls or strategies to alleviate the risk. The span for a risk assessment matrix differs extensively. The exercise may recognize risks at the business process, enterprise, or individual project level.
Different risks, at both levels, process level and financial statement level evaluate together with the controls relevant against the same, can be documented in the form of a RCM. It is a complete document, which captures at one place, for each business cycle.
Here are several points to be discussed.
Here are the illustrative formats of the Risk control matrix that shows the way of work we employ:
It should also address the liability, regularity, and documentary evidence. The frequency is needed to shown them separately.
Here are some of the general business cycles for which the separate RCMs could be prepared depending upon the nature of the business of entity and the materiality of the meticulous process.
Monetary Closing and Reporting
Preparation of a RCM is nothing but the documentation method for the Internal Control Framework and help in reporting on the working efficiency of Internal Financial Controls.
The significant part is to understand the interaction between the business cycles and the related activities or processes and the account balances affecting the same, to the degree it affects the financial reporting. Finally, the RCM also assists to recognize controls which are relevant and not relevant.
When the preparation of the same is suggested by the management as a part of its evaluation of the design and operating effectiveness of the controls for Board Reporting, in terms of Section 134(5 (e) of the companies Act, 2013.
It can use the same to evaluate the operating effectiveness of Internal Financial Controls over Financial Reporting. We put a system to sporadically test the efficiency of the noteworthy controls identified in the RCMs.
We support the enterprise in increasing and designing the risk control matrices and put into practice the controls to talk to the identified risks.