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AUI3701 Assignment 2 Semester 2 2024 $4.85   Add to cart

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AUI3701 Assignment 2 Semester 2 2024

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AUI3701 Assignment 2 Semester 2 2024

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  • August 28, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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By: thobilemkhize • 2 months ago

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QUESTION 01

1.1
Weakness Risk Identified from Weakness
1. High staff turnover in the accounting High staff turnover can lead to a lack of
department due to employees feeling continuity and consistency in accounting
overworked, underpaid, and lack of practices, resulting in errors, delays, and
career development opportunities. potential misstatements in financial records.
2. Lack of regular training for Inadequate training can result in a lack of up-
accounting staff and expectation for to-date knowledge on accounting standards
employees to identify their own and regulations, increasing the risk of non-
training needs. compliance and errors in financial reporting.
3. Performance-based management Focusing only on profit targets may
bonuses tied solely to profit targets incentivize management to engage in
without considering other performance aggressive accounting practices or cut
indicators such as internal controls or corners on internal controls, increasing the
risk management. risk of financial misstatements and fraud.
4. No regular inventory counts and lack Without regular inventory counts and
of inventory reconciliations between reconciliations, discrepancies may go
physical and accounting records. unnoticed, leading to potential theft, loss, or
misstatement of inventory values, impacting
financial accuracy.


1.2

Steps to Promote the Implementation of Control Risk Self-Assessment (CRSA) in
Luminate Limited

1. Establish a Clear Framework and Objectives for CRSA
To successfully implement CRSA, Luminate Limited should first establish a clear
framework that defines the purpose and objectives of the self-assessment process.
This involves identifying the key risks associated with various business operations,
particularly in areas like the accounting department, where high staff turnover and
lack of training have been highlighted. Management should develop a comprehensive
CRSA policy that outlines the roles and responsibilities of employees at different
levels, the scope of the assessment, and the expected outcomes. By setting clear
objectives, such as enhancing the accuracy of inventory records or reducing staff
turnover through better training and support, the organization can ensure that CRSA
efforts are focused and aligned with its strategic goals.
2. Develop a CRSA Training and Awareness Program
Given the high staff turnover and lack of training opportunities at Luminate Limited,
it is crucial to develop a CRSA training and awareness program. This program should
educate employees about the importance of internal controls, risk management, and
their role in the CRSA process. Training sessions should cover the basics of CRSA,
how to identify and assess risks, and the procedures for documenting and reporting
findings. By building awareness and understanding among employees, the
organization can foster a culture of ownership and accountability, where staff

, members are more likely to proactively identify risks and contribute to the continuous
improvement of internal controls.
3. Facilitate Regular CRSA Workshops and Self-Assessment Sessions
To promote the active engagement of employees in the CRSA process, Luminate
Limited should organize regular workshops and self-assessment sessions. These
workshops should involve cross-functional teams, including representatives from the
accounting department, inventory management, and senior management, to ensure a
comprehensive assessment of risks across the organization. During these sessions,
employees can collaboratively identify control weaknesses, propose improvements,
and develop action plans to mitigate identified risks. Facilitating open discussions and
encouraging input from all participants will help to identify risks that may not be
immediately apparent to management and ensure that all areas of the business are
adequately covered.
4. Establish a Monitoring and Feedback Mechanism
To ensure the effectiveness of the CRSA process, Luminate Limited should establish
a robust monitoring and feedback mechanism. This involves regularly reviewing the
outcomes of self-assessment sessions, tracking the implementation of action plans,
and evaluating the effectiveness of controls. Management should provide feedback to
employees on their contributions to the CRSA process and recognize their efforts in
identifying and mitigating risks. By continuously monitoring the process and
providing constructive feedback, the organization can ensure that CRSA remains an
integral part of its risk management strategy and promotes a culture of continuous
improvement and accountability.

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