22107 Lecture Notes - Lecture 5: Password, Physical Security, Internal Control
Document Summary
Control activities (elaborated) - establishing responsibility, maintaining adequate documentation, segregation of duties, physical security, independent verification. Components of internal control: consists of the following components, control environment, risk assessment, control activities. Identification and analysis of risks with the goal of effectively managing them: risk assessment must adapt to changing business conditions. Therefore, if it is returned short of cash, management knows who to consult. This motivates cashiers to perform their tasks well and minimises the risk of theft or error: maintaining adequate documentation, promotes error-free accounting records, e. g. The sale of a (cid:272)o(cid:373)pa(cid:374)(cid:455)(cid:859)s i(cid:374)(cid:448)e(cid:374)to(cid:396)(cid:455): requires that the sale be documented on a sales invoice (recorded sequentially so that sales will not be lost or recorded twice). If one employee handles all three tasks, there is a greater risk of error or theft of assets. Internal audit divisions of organisations commonly perform verifications.
