ACCT1501 Chapter Notes - Chapter 7: Internal Control, Computer Fraud, Whistleblower
24 May 2018
School
Department
Course
Professor
Internal Control & Cash
Iteal Cotol: Poess effeted y a etity’s oad of dietos, aageet ad othe
personnel, designed to provide reasonable assurance regarding the achievement of objectives in the
following categories
➢ Effectiveness and efficiency of operations – including safeguarding assets against loss
➢ Reliability – of internal and external financial and non-financial reporting
➢ Compliance – with applicable laws and regulations
- Objectives:
➢ SAFEGUARD assets against waste, fraud, inefficiency – locks, keys, insurance, patents,
pw, stocktakes
➢ Promote the RELIABILITY of accounting data – separation of acct functions/duties
➢ Encourage COMPLIANCE – occupational health and safety, complaints, whistleblowing
- FIVE components:
➢ Control Environment: policies and procedures
1. From the top – influence the others (employees)
➢ Risk Assessment: Identify and analyse sources of risk
2. Identify based on objectives/ impact on the objective
➢ Control Activities: Preventive, detective
3. Actual actions first supported by Control Environment, then supposed to reduce risk
next
➢ Information and Communication: Timely, Flow, Feedback
4. Managers and employees can exchange feedback
➢ Monitoring: Ongoing monitoring, Separate evaluations
5. Separate evaluations – peer reviews, self-assessment, audit, review internal systems
overtime
- Features:
➢ Tone from top and HR
➢ Separation of duties
➢ Physical protection of sensitive assets
- Limitations:
➢ Reasonable assurance
➢ Genuine mistakes
➢ Management override – management manipulate revenue
➢ Collusion among employees – cant prevent 100%
➢ Computer fraud
➢ Cost versus benefit – need money to implement int. control system
- Internal Control of Cash:
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
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