Internal Controls Description_Business Risk Assurances_Fraud Detection

1. Internal Controls and Risk
Assessment
Internal Control
Risk Assessment
Risk
.

2. Poor
Management
Information
System Demanding
Targets and
linked
Rewards
Arrogance &
Resistance
Poor
Accounting
Controls
Lack of
TransparencyGreed
Complex
Organizationa
l Structure
Complacency
Lack of Clear
Moral
Direction
Non
Independent
Internal Audit
Department
10 Reasons why fraud occurs

3. All people committed towards a common goal
Systems Design and Internal Controls
Finally the spirit to overcome the odds
A successful organization needs three
things

4. Key Components of Managements’
Assessment of Internal Control
Management must
evaluate the design of
internal control over
financial reporting.
Management must test
the operating
effectiveness of those
controls.

5. What is Internal Control?
Internal control is a process, effected by an entity’s
board of Directors, management and other personnel,
designed to provide reasonable assurance regarding the
achievement of objectives in the following categories:
 Effectiveness and Efficiency of operations
 Reliability of financial reporting
 Compliance with applicable laws and regulations

6. Internal Controls “Can”
 Promote reliable internal and external financial reporting
 Help safeguard assets
 Promote compliance with laws and regulations
 Help a company achieve its performance and profitability
targets

7. Nature of Risk
 R= risk is relative because perception of downside and
upside risk is individual, and that applies to people and
organizations.
 I= risk is intuitive because we learn with experience
and time.
 S= risk is significant because everything we do has
positive and negative consequences.
 K= risk is kinetic because it changes relative to
situations, events, time and space.

8. Internal Risks
 Policies and Procedures
- Internal Controls
 Contracting
- Vendor Relationships
- Physician Relationships
 Financial Reporting
- Financial Statements
- Tax Returns
- Cost Reports
- Investor Reporting
- Credit Risk
- Liquidity Risk
 Crisis Management Program
- Business Continuity Plan
 Human Resource Management
- Hiring & Terminations
- Employee Relations
 Governance
- CEO Succession
 Clinical Practices
- Quality
- Core measures
- Evidence Based
 Information Technology
- Security
- Disruptions
 Document Management

9. What Affects Risk?
 Organizational Cultures and Ethics
 Financial Pressures
 Technology
 Competition
 Business Strategy i.e. joint ventures, mergers, acquitions
 Central, State and International Laws
Change= Risk

10. Types of Controls
 Preventive Controls:
- Designed to prevent errors or irregularities before they have occurred
- Examples:
 Passwords and physical safeguards are established to restrict
access to appropriate personnel .
 Authorization and limits are established to ensure the
appropriate oversight of significant transactions
 Detective Controls:
- Designed to detect errors or irregularities after they have occurred
- Examples:
 Exception reports are reviewed and cleared by persons with
appropriate authority
 Documentation reviews are completed to ensure files are
complete
 Directive Controls:
- Explain “how to do” something or process
- Examples:
 Policies or procedures

11. Internal Controls
It’s Good for Your Fiscal Health
– Effectiveness and Efficiency of Operations
– Reliability of Financial Reporting
– Compliance with Laws and Regulations
It’s Good for Your Physical Health
– Balanced Diet
– Exercise
– Good balance of leisure and work-mental health

12. Thank You