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This is an Internal Auditing assignment. I shall upload the complete instruction page, this is the instructions cut from it. Please, pay attention to every aspect of all three questions. Also noting the minimum pages length for each question. There is a shortcut link at the end of instruction sheet, for a page that would assist in completion of assignment.
Required:
Prepare typed responses to the following questions. Your paper should be between 3-6 pages, double-spaced, 12 point font.
Discussion Questions:
1. The Committee of Sponsoring Organizations (COSO) ERM Framework states that companies must set objectives in four areas: strategic, operations, reporting, and compliance. COSO further states that to achieve those objectives, companies must have eight components in place: internal environment, objective setting, event identification, risk assessment, risk response, control activities, information and communication, and monitoring. Address the following questions in your response; your response to this questions should be one-two pages – not one paragraph! Evaluate Prudential before Ryan took over!
a. How would you describe Prudential’s internal environment?
b. What types of events, both external and internal, did management identify as affecting the company and did the company see these events as risks or opportunities?
c. Did management do an adequate job identifying risks and, of those identified risks, what was management’s one primary risk response (the 4 “Ts”)?
d. How was information identified, captured, and communicated to agents? And, finally, how did upper management monitor the ERM framework within Prudential?
2. As Prudential’s business risk advisor, you identify the following risks within the company:
a. The use of sales quotas provokes the scam of churning and refinancing.
b. Lack of formal training of agents results in a lack of competence.
c. The incentives system (i.e., commissions and bonuses) favors churning and refinancing practices.
d. The lack of correction practices (punishment and rewards) does not preclude wrongful sales practices.
e. Customer complaints are wrongfully dismissed.
Assess the importance of the above risks. First consider whether the dollar significance for each risk is low, medium, or high. Second, evaluate the likelihood of occurrence of each risk as low, medium, or high. Explain why you rated the risks as you did. Using the draw feature of Word, prepare a Risk Map as in Exhibit 5-15 (pg. 5-23). According to the risk map, which of the five risks is/are most critical for Prudential?
3. Consider the five risks (a – e) which were identified in Question 2. What controls has Ryan put in place to mitigate the five risks listed above? You will want to prepare a formal Risk and Control Matrix. After preparing the Risk and Control Matrix, prepare a Risk Control Map as in Exhibit 5-16 (pg. 5-24). Under Ryan’s leadership, has Prudential done enough to adequately manage these risks? Why or why not?
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