An integral role of a CPA (Certified Public Accountant) is risk management and assessments for their clients. While Risk Management is necessary across departments, when it comes to accounting, there are a variety of scenarios and analyses required.
What Role Do Accountants Play in Risk Management?
Accountants play an integral role in risk management, with many offering specific services or organization-wide services to assist with this risk. Not only is a CPA involved in financial reporting and strategy, but they must also consider the risks—both positive and negative—to an organization, depending on their overall goals.
Accountants offer risk management for:
- Internal controls and processes
- Audit risk assessments
- Anti-money laundering programs
- Accounts payable risk
- Enterprise risk management
- Risk mitigation
- Innovation
- Industry-specialties (i.e. cryptocurrency or real estate)
- Identifying and eliminating risks
- ISO 31000-2018 principles
- and much more
CPAs follow the risk assessment standards outlined by the AICPA (American Institute of Certified Public Accountants), which includes everything from Audit Evidence and Audit Risk Assessment to Quality Control Standards and Blockchain.
If you are considering implementing an effective risk assessment strategy, it’s integral to seek the support of a third party accountant (CPA).
Common Requests in Risk Management
While there are a few common risk assessments many business will seek, it’s important to remember that every situation is truly unique. While the procedures of an in-depth risk assessment have little variance, the focus area of your business will depend on your needs and the recommendations of the accountant.
Many assessment areas target processes that can be inefficient, require multiple inputs, and create tremendous room for error.
Audit Risk Assessment
An audit risk assessment can include a variety of evaluations, including looking into operations, staff, and management as well as inspecting the company’s cashflow, vendor relationships, industry, transactions, pricing, and more.
If you are looking for a CPA to evaluate your risk of an IRS audit, look for a CPA who has experience with tax strategy and services.
Accounts Payable Risk Assessment
Any instance where you are tendering payment to another business or individual creates a dynamic ecosystem vulnerable to risk. This type of assessment evaluates the process through which payments are made, what sort of controls and checks and balances are in place, who manages the process and what oversight, as well as data and payment controls.
This is also a component of the business vulnerable to fraud, unauthorized spending, and errors.
Financial Reporting Risk Assessment
Financial reporting covers a great deal of data management, operations, logging, and systems. This is a robust assessment that will assess transactions and transaction volume, how data is stored and managed (including any third-party or physical locations), previous audits, and how processes create potential for error.
This should be done by every company regardless of size, and many will do so yearly or quarterly. Inviting a CPA into your ecosystem to evaluate and make changes can be difficult, but minimizing risk protects your business from threats of fraud, mishandling funds, and other errors with costly fees, fines, and even legal consequences.
Cryptocurrency Accounting and Tax Risk Assessment
While there are many risks associated with cryptocurrency just from a data and security standpoint, the core risks of cryptocurrency include financial, legal, and political risks. Therefore, it’s important to have a risk assessment approach that considers ongoing mining and trading, storing of digital currency, tax strategy and reporting, and the changing regulations of a fairly new money market.
A qualified cryptocurrency CPA can utilize their expertise and standards to evaluate your cryptocurrency ecosystem for risks associated with accounting, tax, and reporting.
ISO 31000 2018 Risk Management
ISO 31000-2018 risk management incorporates a variety of principles aimed at enterprise risk management. This management approach is structured and comprehensive, tailored to your business and the related processes, dynamic and ever-changing based on new data and approaches, and is based around the best available information. This approach ensures a risk management strategy that supports longevity, regular reassessment, and improvement.
Finding the Right CPA for the Task
Finding the right CPA for a risk management assessment can feel overwhelming, but rest assured most accountants are prepared, experienced, and can walk you through the process. Our team of dedicated accountants can offer assessments as broad as business entity to specific departments like payroll. Contact us today for assistance.
