Risk Identification and Control Mapping – The Blueprint of ICFR
Why Risk and Control Mapping Is Crucial
At the heart of every ICFR program is the ability to answer one question:
"What could go wrong, and what control exists to prevent or detect it?"
Risk and control mapping connects:
- Financial reporting risks → accuracy, completeness, cutoff, valuation, fraud
- Processes → order to cash, procure to pay, payroll, financial close
- Controls → approvals, reconciliations, system checks, segregation of duties
What is a Risk Control Matrix (RCM)?
The RCM is a structured tool that documents:
- The process and related Financial Statement Line Items (FSLIs)
- The specific risks to financial reporting
- The internal controls that address each risk
- Control characteristics: type, frequency, owner, documentation
Sample RCM Layout
|
Field |
Example |
|
Process |
Procure-to-Pay |
|
Risk |
Expenses booked without valid invoice |
|
Assertion |
Accuracy, Occurrence |
|
Control |
3-way match (PO-GRN-Invoice) before booking |
|
Type |
Preventive / Automated |
|
Frequency |
Per transaction |
|
Owner |
Accounts Payable Head |
Common ICFR Risks & Control Examples
|
Risk Type |
Example |
Typical Control |
|
Revenue Recognition Risk |
Revenue recorded before delivery |
Delivery confirmation required before invoicing |
|
Valuation Risk |
Inventory not valued correctly |
Periodic stock count + system-based revaluation |
|
Cutoff Risk |
Sales booked in the wrong period |
Month-end cutoff checklist and control sign-off |
|
Fraud Risk |
Fictitious vendors created |
New vendor approval through ERP workflow |
UAE Context – Why Mapping Matters
- SCA Requirements: PJSCs must demonstrate that all material FSLIs are covered by appropriate controls.
- CBUAE Reporting: Insurers are required to show ICFR design effectiveness and risk coverage.
- Tax Compliance: Control mapping supports audit trail and documentation required under the UAE Corporate Tax Law (Decree-Law No. 47 of 2022), including intercompany and transfer pricing documentation.
Best Practices for Control Mapping
- Use walkthroughs to validate real-world control execution.
- Differentiate between key controls (subject to testing) and supporting controls.
- Prioritize preventive over detective controls where feasible.
- Document control frequency, evidence type, and control owner.
- Keep RCMs updated as processes or systems change.
How We Help Organizations Build Strong Control Frameworks
At Crowe, we:
- Facilitate risk identification workshops
- Develop and review process-level RCMs
- Tag key controls for testing
- Align control language to COSO and UAE regulatory expectations
- Train teams on control mapping best practices
Coming Next Week:
Next week, we explore Control Design Evaluation & Testing, how to assess whether your controls are working effectively and meet audit standards. We’ll cover design walkthroughs, documentation, and sample-based testing.
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