RISK MANAGEMENT AND CONTROL

Abstract

The internal control system in the organization allows the management to track and achieve the functional and financial goals, using the relevant legal requirements to reduce unexpected changes affecting work. The management of the organization, according to the normative acts, is responsible for the creation and implementation of the internal control process, which aims to achieve the so-called a reasonable degree of certainty for the fulfillment of the set objectives. Internal control is realized through five elements covering the control environment, risk management, controls with which it is affected, information exchange and monitoring. Any organization in the process of work is likely to bear the influence of possible risk impacts originating from various sources, both inside and outside the organization. Risk management is understood in the first place as actions on its recognition, determining the degree of impact in relation to the objectives in order to determine the ways in which it can be affected, with the aim of reducing its impact.
In order to manage a certain risk, after it has been identified and assessed, various control activities are applied, which are understood as actions aimed at reducing the impact of the risk, so that there are no significant obstacles to achieving the goals.
When we talk about risk control and management, we can also mention the audit risk, related to the probability that the company's financial statements contain errors that are material to the company's accountability and have been checked and audited without any sanction by the auditing authority.
With regard to the risk for the auditor, the existence of possible inaccuracies and errors in the financial report that affect the true and accurate state in a financial aspect is assumed, or there are intentionally caused damages of a financial nature to the organization, and at the same time in the auditor's report this was not reflected due to an oversight by the auditor. Audit risk concerns the quality of the audit and the opinion expressed by the auditor, which may mislead owners, investors, etc.