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Thats something you might want to confirm with the tutor… as long as you understand the concept and remember it which way works for you… I can’t see any reason that should prevent you from doing so… but still double check with the tutor.
RazaBenefits of Enterprise Risk Management (ERM)
Alignment of risk appetite and strategy.
The framework demonstrates to managers the need to consider risk toleration. They then set objectives aligned with business strategy and develop mechanisms to manage the accompanying risks and to ensure risk management becomes part of the culture of the organisation embedded into all its processes and activities.
Link growth, risk and return.
Risk is part of value creation, and organisations will seek a given level of return for the level of risk tolerated.
Choose best risk response.
ERM helps the organisation to select whether to reduce, eliminate or transfer risk (TARA)
Minimise surprises and losses.
By identifying potential loss-inducing events, the organisation can reduce the occurrence of unexpected problems.
Identify and manage risks across the organisation.
Managers will have a better understanding of risks. Also means that risk management is seen as everyone’s responsibility; experience and practice is shared accross the business and a common set of tools and techniques are used.
Provide responses to multiple risks.
For example, risks associated with purchasing, over and under supply, price and dubious supply sources might be reduced by an inventory control system that is integrated with suppliers.
Seize opportunities.
By considering events as well as risks, managers can identify opportunities as well as losses.
Rationalise capital.
ERM allows management to allocate capital better and make a sounder assessment of capital needs.
You’re welcome, you should also listen to the video lecture for chapter 9 of the opentuition course notes.
All the best.
RazaYes, COSOs framework is used to mange risk.
The Map, which I assume you are talking about the impact/consequence matrix?, is used to analyse risk
Tara is used as a process to respond to risk, i.e. to transfer, avoid, reduce or accept.
Both of these are covered in COSO’s framework (see below)
COSO’s enterprise risk management framework provides a coherent framework for organisations to deal with risk, based on the following elements…
Internal (Or Control)Environment – Tone of the organisation, Risk attitude/Appetite
Objective Setting – Objectives should support the overall mission of the entity, and be consistant with its risk appetite.
Event Identification – Prepare a list of potential risks (both internal and external)
Risk Assessment – Prioritise the potential risks – this is where the ‘Map’ you mentioned above comes in… i.e. High Probability/High Impact, Low probability, High impact etc..
Risk Response – Management selects risk responses such as TARA (transfer, accept, reduce, or avoid), which are used to develop a set of actions to align risks with the entity’s risk tolerances and risk appetite.
Control Activities – Policies and procedures in place to help ensure risk responses are effectively carried out.
Information and Communication – Relevant information identified, effective communication throughout the entity (incl Shareholders and regulators), enabling the workforce to carry out their responsisbilities, which will in effect minimise risk.
Monitoring – the control processes in place are monitored and if neccessary modified. Effective monitoring requires active participation by the board and senior management, and strong information systems, so that the data senior managers need is fed to them.
Hope this helps.
RazaHi
Yes they do.
The remuneration of NEDs is determined by the board or the SHs…’within the limits prescibed by the company’s constitution’. (UK CGC)
Basically… their fees will differ from company to company, and because the remuneration committee comprises of solely NEDS, they determine the remuneration of executive directors, but it would go against corporate governance & best practice, if they were able to determine their own remuneration, and also against the characteristics of Non Executive Directors, such as… Independence, Integrity, Objectivity.
Does this make sense?
RazaTypes of Stakeholders – PINKLAVR
Primary/Secondary
Internal/External
Narrow/Wide
Known/Unknown
Legitimate/Illegitimate
Active/Passive
Voluntary/Involuntary
Recognised/Unrecognised@rachuhi1340 said:
P-43 of opentution Course Notes 2011-is about ROLE and Functions of an audit committee. They are stated there as follows:
. create a climate of discipline and control… C
. lend an air of credibility and objectivity…… L
. assist CFO by providing a forum A
. review financial statements to improve the quality of… R
. independent judgement I
. strengthen position of the internal auditor S
. strengthen position of the external auditor S
. assist in the resolution of disputes……………… AI think “CLARISSA” reflects just to those function for ease of remember.
Hi Rachuhi1340, thanks for this, I’ve copied and pasted your post in the Mnemonics thread, if you have any more please add them there…
Thanks
Role and Function of an Audit Committee
CLARISSA
rachuhi1340 said 3 weeks, 4 days ago:
P-43 of opentution Course Notes 2011-is about ROLE and Functions of an audit committee. They are stated there as follows:
. create a climate of discipline and control… C
. lend an air of credibility and objectivity…… L
. assist CFO by providing a forum A
. review financial statements to improve the quality of… R
. independent judgement I
. strengthen position of the internal auditor S
. strengthen position of the external auditor S
. assist in the resolution of disputes……………… ACorporate Governance elements
HAIRDRIFT
Honesty/Probity
Accountability
Independence
Responsibility
Decision taking/Judgement
Reputation
Integrity
Fairness
Transparency/OpennessInternal Controls
OAP SPASM
Organisational Controls
• Control over the organisation structure including managers having specific
• Responsibilities and delegations tasks.Authorisation
• Controls to ensure that transactions do not proceed until an appropriate individual has given approval.
Physical
• Protection of assets against theft, unauthorised access or use.
Supervision
• Oversight of work of other individuals to ensure tasks are carried out correctly.
Personnel
• Controls in place to ensure the suitable people are employed.
Arithmetic Accounting
• Checking accounting transactions for accuracy, includes use of accounts and reconciliations (e.g. bank reconciliation).
Segregation/rotation
• Different people for each transaction to – Authorise, Record, Maintain physical custody of any assets (i.e. petty cash), pay for it.
Management Controls
• Control actions taken by management depending on the contents of reports received. Managers should be involved in the day to day supervision of staff.