Internal Control and Risk Evaluation

Internal control of inventory, accounts payable, accounts receivable, and salary is an important part of the company's system. In these four systems, the efficiency and accuracy of the staff is required before the accounting system guarantees easy access to cash availability. Internal control provides a foundation for a successful and secure organization. The information presented in this overview provides management with insight into the internal controls that risk organizations should know. In the payroll payroll calculation, processes and procedures are not clearly defined.

In the case of listed companies, the Sarbanes-Oxley Act of 2002 required auditing of internal controls. The objective of internal control assessment is to evaluate risk, provide the auditor's grounds for the audit plan to the auditor, and provide useful information to management ("Sox law", 2006). The auditor usually uses the five basic elements of internal control to approve the entire system. According to Louwers, Ramsay, Sinason, and Strawser (2007), the five elements of internal control include the control environment, risk assessment, control activities, monitoring, and information communication. Organizational tone is involved in the control environment such as "company employee's integrity, ethical value, and ability" (Louwers, Ramsay, Sinason, and Strawser, 2007). Risk assessment includes a comprehensive evaluation of "identifying risk, estimating its importance and possibility, and risk management method" (Louwers, Ramsay, Sinason & & Strawser, 2007).

Because everyone from the post office to the board of directors is involved in internal control, the role of internal audit in assessing risk management is extensive. The work of the internal auditor includes assessing the organization's health and risk management culture at a certain level and evaluating and reporting the effectiveness of implementation of another level of management policy. The role of management is to identify the risks the organization faces and to understand how they affect the achievement of goals if they are not effectively managed. To ensure that these limits are not exceeded, administrators need to understand how much risk the organization has to implement control measures and other protection measures. In some organizations, the risk appetite for business and economic trends and changes is high. As a result, the internal audit method evolved from a reaction-based and control-based approach to a more proactive and risk-based approach.