Why risk assessment is key to implementing internal controls

In this video, we explore the importance of scoping and risk assessment to achieve effective internal controls over financial reporting (ICFR).

With newly proposed regulations, as outlined by the recently published consultation white paper from the Department of Business, Energy and Industrial Strategy (BEIS), boards will need to attest to the effectiveness of internal financial controls over financial reporting. Under the proposed internal controls regulations, the CEO and CFO will need to be confident that controls are operating.

They will need to have a good understanding of what processes, IT applications and entities fall under the scope of this impending regulation and conduct a risk assessment to ensure that their implementation is focused and efficient.

Early scoping will benefit complex organisations

If your business has many IT applications or overseas entities, you will benefit from a detailed scoping exercise. This will help you understand which entities and IT applications are in or out of scope, therefore saving a lot of unnecessary work. Once you’ve done that, you’ll then need to undertake a good-quality risk assessment.

Watch our video to know more about why scoping is important. Along with an overview of our three-step process to risk assessment, it will also help you gain an understanding of how to make your own internal controls implementation focused and efficient.