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ASSIGNMENT
1. Acknowledgment …………………………………………………………………......……………………Page 1
3. Our reasons for choosing Ethiopian Revenue and Customs Authority (ERCA)…..Page3
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9. Conclusion……………………………………………………………………………………………………….Page
Acknowledgment
This Assignment was made by the 2st year section 5 students of Accounting Department.
We would like to thank our colleagues and our institution and mostly our instructor for providing us with the
Who gave us the golden opportunity to do this wonderful project on the topic Risk Management which
Also helped us in doing a lot of Research and we came to know about so many new things we are really
Thankful for him. Secondly, we would also like to thank the risk management department of Ethiopian
Revenue and Custom Authority who helped us a lot on providing information and We would also like to
Express our gratitude for everyone we didn’t mention that also helped us morally.
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Introduction
Risk can be defined as the combination of the probability of an event and its consequences. In all types
of undertaking, there is the potential for events and consequences that constitute opportunities for
benefit or threats to success.
Risk implies future uncertainty about deviation from expected earnings or expected outcome..
Risks are of different types and originate from different situations. We have liquidity risk, sovereign
risk, insurance risk, business risk, default risk, etc. Various risks originate due to the uncertainty arising
out of various factors that influence an investment or a situation.
According to our class lesson risk management Is a process that identifies loss exposures faced by an
organization and select the most appropriate technique
According to our Reference manuals Risk management is the process of Identifying, Assessing & Controlling
treat to an organization capital and earnings these threat or risk could steam from a wide variety of source In
other words risk management refers to the practice of identifying potential risks in advance, analysing them
and taking precautionary steps to reduce the risk.
According to the Ethiopian Revenue and costumes authorities It is the skill of the management to identify,
analyse, and evaluate the risks of scientific discovery, thereby reducing or eliminating potential losses
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.
The company we choose to conduct our risk management process is the Ethiopian Revenue and Customs
Authority (ERCA)
The Ethiopian Revenues and Customs Authority (ERCA) is the body responsible for collecting revenue from
customs duties and domestic taxes. In addition to raising revenue, the ERCA is responsible to protect the
society from adverse effects of smuggling. It seizes and takes legal action on the people and vehicles involved
in the act of smuggling while it facilitates the legitimate movement of goods and people across the border.
The ERCA traces its origin to July 7, 2008 as a result of the merger of the Ministry of Revenues, the Ethiopian
Customs Authority and the Federal Inland Revenues into one giant organization.
The Authority came into existence on 14 July 2008, by the merger of the Ministry of Revenue, Ethiopian
Customs Authority and The Federal Inland Revenue Authority who formerly were responsible to raise
revenue for the Federal government and to prevent contraband. Reasons for the merge of the foregoing
administrations into a single autonomous Authority are varied and complex.
Some of those reasons include:
To provide the basis for modern tax and customs administrations
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laws, regulations and directives and the collection of other revenues; and based on the result of the study
and research initiate laws and policies and implement the same up on approval;
Management Hierarchy
The ERCA has its headquarters in Addis Ababa. It is led by a Director General who reports to the Prime
Minister and is assisted by five Deputy Director Generals, namely D/Director General for Program Designing
of Operation and Development Businesses; D/Director General for Branch offices' Coordination and
Support; D/Director General of Enforcement Division; D/Director General, Corporate Functions Division;
Change Management and Support Sector; and Enforcement Sector. Each deputy director general oversees
at least four directorates. Both the Director General and the Deputies are appointed by the Prime Minister.
Up to June 2011, the ERCA has about 6095 employees and its workforce is projected to rise to 12,000 in the
future. Until June 2011, the ERCA's annual operating budget is 458 million birr and is appropriated by
Ministry of Finance and Economic Development.
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1.Risk Identification process
The first step in the risk identification process is the following when we ask ourselves these questions, we can
begin to identify the risk that the company (ERCA) faces.
1. What are our risks the company faces? 4. Why does it happen?
2. Where does it happen? 5. How can it happen?
3. When can it happen? 6. Who can make it happen?
Internal risk are the following External risk are the following
Tariff risk
Tariff risk is an average of five sub-criteria, and each sub-criterion is responsible for risk analysis and
statistical calculation.
The price level of appliances works at statistical calculation based on the average number of two sub-
criteria.
Commodities for Collective and Tax Credit (contribution to revenue collection
Performing risk analysis based on minimum value / reference value
A CPC code will be used to determine the level of risk of a particular user, investor and other codes.
It will enable embassies, international organizations, and on the basis of the unique rights of regional
organizations.
2.Measure and analyse the risk level(mainly concerned on the severity and frequency of the risk)
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How much is the risk / priority level?
How much resources the company has manage or control the risk?
What is the result of containing or avoiding the risk?
What are the advantages and disadvantages?
Risk Probabilities
The likelihood and measurement of a risk management in the company plan is as follows
Priority to
Chance of The effect of Level of the The owner of
Purpose Fear of Risk
loss the casualty vulnerability Resurrection the fault
of risk
Bulky Customs
company Occasionally High Medium High priority Clearing
procedure Process
Risk
Measurement
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Once the risk happens methods in which it will be dealt or controlled by ERCA
Avoiding the perils, Financing or accepting the risk, Transfer the risk to another party, reducing the causality
of the risk using different the management technics.
This technique is used when the risk level is high and the damage that this risk brings is highly uncorverable.
The company tries to avoid the risk because it bring more disadvantages, than the advantages it brings to
the company
When the risk level is low there is enough resources to deal with the damages that the risk brings depending
on the degree of risk of finance is involved here in the company and the risk is identified by the company
and it accept the risk and try to do as much as possible, to control the risk using the company financing
The company transfers the risk that cannot be cared or handle by our company for other entities (like
insurance)
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How to control risk
The company specifically use the following risk control mechanism such as
Systematic corrections and risk ratings are adjusted by systematic improvements in the systematic risk
of system interruption and risk improvement at all times as necessary in the systematic modifications
Increase risk and weight according to information obtained from 3rd party, agency, profile, and more.
Identifying, Analyzing and Suppressing New sample on the Offices, Transferring to Headquarters
Develop strategies for different threats at the center and collaborate with relevant stakeholders and
evaluate its impact.
Provide regular reports to relevant parties and headquarters
The Authority is working to ensure the safety of incomes, preventing the smuggling and keeping the
community safe, with the help of the scanning Technology Support Center at the entrance to the
transit stage
Their Risk Level Improved Testing and Documentation Testing Results shall evaluate the effectiveness
of the assessment and evaluate the results to the principal office and inform the results thereof to the
headquarters.
It is important to monitor and evaluate the effectiveness of risk management at every level. We can follow
these steps:
Conclusion...
According to our observation and assessment we got to see the following point
The company has structured risk management policy and procedures such as well organized risk
identification process, risk prevention, as well as an excellent risk measurement and controlling
system how ever the insurance transfer policy and procedures is not acceble to the general public
we also observed that it is very important that the support and commitment of the leadership, the
involvement and ownership of all employees is needed to implement the risk policy that the
company brought.
Generally, risk management will create conducive conditions for efficient oversight and efficient
operation.
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