ACCT I S 100 Study Guide - Midterm Guide: Financial Statement Analysis, Discount Window, Debits And Credits
13 Oct 2016
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Fraud: fraud- a dishonest act by an employee that results in personal benefit to the employee at a cost to the employer, fraud triangle: Opportunity- for an employee to commit fraud, the workplace environment must provide opportunities that an employee can exploit (most important element) Rationalization- ex: employee believes they are underpaid so justifies stealing: congress passed sox to prevent/detect fraud. All publicly traded us corporations are required to maintain an adequate system of internal control. Corporate executives must ensure that these controls are reliable and effective. Independent outside auditors must attest to the adequacy of the internal control system. Sox also created the pcaob to establish auditing standards and regulate activity. Internal controls: a control environment, risk assessment, information and communication, monitoring, control activities. Establishment of responsibility- control is most effective when only one person is responsible for a given task. Establishing responsibility often requires limiting access only to authorized personnel and then identifying those personnel.
