The Risk Management Committee should identify financial statement elements (accounts) and list them in the Risk Assessment-Management Worksheet Template. The Risk Management Committee shoukd list identified key financial reporting threats, or hazards, for each element listed in columns “A” through “C” and list those threats in column “D” of AC1020-1 RISK ASSESSMENT/MANAGEMENT WORKSHEET. Key threats answer the question, “What threatens the effectiveness of the accounting/finance systems and, in turn, could compromise the continuing efficiency, profitability, and success of the company’s operations?”
The Risk Management Committee should describe the consequences of a given threat, if it were to materialize, in column “E” of the Risk Assessment/Management Worksheet. The Committee should determine the potential impact of each threat and indicate the level of impact in column “F” and should estimate the likelihood that the threat will occur in the next reporting period (i.e., year) and record this ranking in column “G”.
As the company becomes aware of new threats, the CFO should reconvene the Risk Management Committee for the purpose of assessing and prioritizing them in relation to threats already accounted for on AC1020-1 RISK ASSESSMENT/MANAGEMENT WORKSHEET.
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