Risk Management - LUKE Accounting Services

Risk Management, Internal Controls & Internal Audit

Adopt a risk-based approach to identify and mitigate your business risks.

Risk management, internal control and internal audit

Our Services

Risk Management Strategy

Evaluating your operating risks to tailor-make your risk management strategy

Setting Internal Controls

Establish sound internal controls to mitigate risks and prevent fraud and malpractices (e.g. corruption)

Training

Assisting with change management through staff training

Internal Audit

Undertaking internal audit to ensure compliance with the laid down policies, procedures and regulations

Investigations

Conducting fraud and business investigations

FAQs

What are the possible risks faced by a company?

1. Business risks such as –
– political risks, government policy
– general / regional economic problems
– industry / market risk (e.g. sector in decline; competitive pressure on price / market share)
– wrong business strategy; too slow to respond to demands from market and customers; over reliance on key customers
– poor brand management
– obsolescence of technology; too slow to innovate and reengineer
– bad acquisition; or becoming a takeover target.

2. Financial risks such as –
– credit risk; interest risk; currency risk
– liquidity risk; overtrading; high cost of capital; unfulfilled pledges to investors
– decisions based on incomplete or faulty information
– breakdown of accounting system; penetration and attack of IT systems by hackers
– fraud

3. Compliance risks such as –
– breach of Listing Rules
– breach of financial regulations and other statutory requirements (e.g. Companies Ordinance; environmental issues and competition regulations)

4. Operational and other risks such as –
– inefficient / ineffective management process
– probity issues (e.g. bribery; breach of confidentiality)-
– skills shortage; loss of key people; lack of employee motivation or efficiency; industrial action
– stock-out of raw materials
– loss of physical or intangible assets
– physical disasters (e.g., fire and explosion)

What are the limitations of internal controls?

There are inherent limitations in control. A sound and well designed system of internal control reduces, but cannot eliminate the possibility of

– poor judgement in management decision-making;
– human error or mistake;
– control activities and processes being deliberately circumvented by the collusion of employees or others;
– management overriding controls; and
– the occurrence of unforeseeable circumstances.

Regular internal audit can help to timely detect any control loopholes, non-compliance and fraud.

What is Internal Audit?

Internal audit evaluates a company’s internal controls, including its –

– corporate governance and accounting processes to ensure accurate and timely financial reporting and data collection;

– review compliance with internal controls, laws and regulations; and

– provide management information to attain operational efficiency.