ABSRJ 2019 Volume 10, Number 2

Risk-targeted internal control system that provides the detection of established rules violation and misrepresentations of accounting and financial data

Natalia Kondrashova
Kaluga branch of the Financial University, Russia

Tatyana Lesina,
Kaluga branch of the Russian Presidential Academy of National Economy and Public Administration, Russia

Kirill Titov
Kaluga branch of the Financial University, Russia

Due to the economic changes of Russian Federation, internal control still retains its relevance. The article focuses on the need to improve the efficiency of the created internal control systems in the direction of managing risks of the established rules violations and accounting and financial data misrepresentations. Analysis of the concept of internal control from two methodological points of view allows defining internal control and further considering it as an independent system built into the process of corporate management. Incorporating risk management into the internal control process forms the concept of a risk-targeted internal control system. Following the integrated structure of internal control developed by COSO, the requirements and recommendations of the Russian regulatory legal acts, a model of a risk-oriented internal control system of a commercial organization, represented by an external and internal structure, is proposed. A key element of the internal structure of this system is risk assessment, which involves considering all the facts of economic life through the prism of risks. This allows the organization to develop internal control procedures for all risks of the established rules violations and accounting and financial data misrepresentations and depict them on the risk map. In the course of compiling the risk map, the process of identifying the risks of distortion of the facts of economic life by business processes was specified and an algorithm for the formation and its documentation was proposed. Our study contributes to the existing literature and allows to fill the gap in terms of the practical implementation of improving the system of internal control of commercial implementation, taking into account the modern requirements for its implementation.

Keywords: internal control; internal control system; internal structure; risk of the established rules violations and accounting and financial data misrepresentations; risk map

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