The document discusses internal controls and risk assessment. It provides information on key components of management's assessment of internal control, the nature of risk, types of internal risks, factors that affect risk, types of controls, and how internal controls can promote reliable financial reporting, safeguard assets, and help achieve targets and compliance. Some of the 10 reasons for fraud occurring are also listed.

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