Justification for an Internal Control System

Justification for an midland Control System Many constitutions use the policy or portfolio approach to manage bumps associated with tune activities, whereas others explore the benefits of an ingrained ascendency musical arrangement. A sound inborn control system is vital to an systems risk management procedures. The following paragraphs leave behind describe the insurance and portfolio approaches, and explain the benefits to installing an internal control system as a to a greater extent beneficial alternative. flowing Approaches As stated above, two common approaches used with controls be the insurance approach and the portfolio approach. The insurance approach adheres to the fact that business is risky and therefore protecting the investment is necessary. Purchasing insurance then becomes a tool to protect against redness. However, this tool is more a risk financing tool than it is a risk management tool. In essence, this approach is more reactive, mitigating the impact of losses rather than protecting the assets from loss. The portfolio approach is a bit more structured in that it provides context and a process for decision-making (Thomas, 2002). The report behind the portfolio approach is to minimize risk while maximizing investment.

However, this approach does not provide protection assurance everyplace the investment against risk, it merely organizes the decision-making process to an extent. Internal Control System Internal controls consist of a system of policies and procedures that ensure the protection of an organizations assets. In addition, internal controls instill reliability in an organizations financial data, and endorse compliance with laws and regulations like those found in the Sarbanes Oxley Act of 2002. These systems also help to improve an organizations internal and external communication processes (Cuomo, n.d.). Unlike, the insurance approach, internal control systems argon proactive tools in risk management, evaluating an organization to avoid loss to assets.... If you want to get a full essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper