BU477 Chapter Notes - Chapter 8: Pys, Test Data, Transaction Processing
Document Summary
Internal control: policies and procedures instituted and maintained by the mgmt. of an entity to provide reasonable assurance that mgmt. "s objectives and goals are met. Mgmt. designs systems of internal controls to accomplish 4 broad objectives: strategic, high-level goals that support mission of entity, reliability of financial reporting, efficiency and effectiveness of operations, compliance with laws and regulations. Mgmt. must establish and maintain entity"s internal controls and in public companies, must publicly report on the operating effectiveness of internal controls over financial reporting. 2 key concepts underlie mgmt. "s design and implementation of control: Company develop internal controls that provide reasonable, but not absolute, assurance that f/s are fairly stated. Develop internal controls after considering both costs and benefits of controls. Reasonable assurance = high level of assurance + low likelihood that material misstatements will not be prevented or detected on timely basis by internal control.
