Acc544 Week 2 Assignment

586 Words3 Pages
Justification for an Internal Control System Selina Dickinson May 25, 2015 ACC 543 Joseph Poletti There are some concerns with the idea of adding an internal control system although there are controls in place that the company uses in terms of insurance and portfolio approaches. Understand that implementing an internal control system would not replace the controls in place but would add to the controls and ensure that any risks the company encounters would be at a minimum both internally and externally. Businesses use insurance as a way of managing risk. Once risks are identified, then insurance is considered for these risks. This is considered to be a transfer risk reaction. Businesses seek insurance to help share losses associated with property, income, and liability. There are several types of insurance that a company can purchase such as property insurance, general liability insurance, product liability insurance, and professional liability insurance. They can be purchased separately or as a package. Property insurance helps protect assets against damages and losses. General liability insurance protects against claims from injured parties. Product liability protects against faulty workmanship and professional liability insurance protects engineers, CPAs and other professionals against liability due to errors and omissions in their work. Insurance doesn’t protect a business from all risks. Also an insurance company may not pay out a claim based upon certain factors. So sometimes insurance is not the answer. There are several types of risk that aren’t insurable. They are reputational risk, regulatory risk, trade secret risk, political risk, and pandemic risk. Portfolio approach to management involves setting objectives for value preservation and enhancement, developing and implementing strategies for allocating resources to existing and new
Open Document