ACC 333 Lecture : lease and deprication.doc

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blacksardine128

22 Apr 2012

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Internal control systems are useful because they identify and correct accounting-related fraud or errors. However, internal controls are useless if risks associated with an organization"s routine decisions are not monitored. Enterprise risk management (erm) focuses on risks to an organization"s operations and ensures controls are in place to eliminate, mitigate, or compensate such risks. Additionally, erm identifies and assesses risks related to management"s objectives by evaluating internal control components: control environment, risk assessment, control procedures, monitoring, and information and communication. An effective control environment primarily defines organizational structure, commitment to competence, assignment of authority and responsibility, and internal audit functions. Control environments are important any type of risk approach because it establishes organizational tone, the foundation of organizational internal control, and its response to risk. Risk assessment is the process used to estimate the likelihood and impact of risks on management"s objectives. After potential risks are identified, they become part of an organization"s risk portfolio.

Related Questions

Discuss the concept of internal controls and what it means tothe accounting profession. Why are internal controls important tothe integrity of an organizationâs financial reporting? What is therole of a controller within an organization?

Describe what internal controls are, why they are important, andhow they can be implemented.

Identify at least one internal control; describe what the intentis and how an organization can perform an audit to make sure thatthe controls are properly leveraged.

Match the following terms with their definitions

Internal control a.two or more people working together to overcome internalcontrol

Control procedures b. part of internal controlthat ensures resources are not wasted.

Firewalls c. requires companies to review internal control and takeresponsibility for the accuracy and completeness of their financialsupport

Encryption d. should be pre-numbered to prevent theft andinefficiency.

Environment e. limits access to a local network.

Information system f. example: theperson who opens the bank statement should not also be the personwho is reconciling cash.

Separation of duties g. identificationof uncertainties that may arise due to a companyâs products,services, or operations.

Collusion h. examination of a companyâs financialstatements and accounting system by a trained accountingprofessional

Documents i. without a sufficient one ofthese, information cannot properly be gathered and summarized.

Audits

j. the organizational plan and all the related measures thatsafeguard assets, encourage employees to follow company policies,promote operational efficiency, and ensure accurate and reliableaccounting data.

Operational efficiency k. component of internal control that helps ensure business goalsare achieved.

Risk assessment l. rearrange data by a mathematical process.

Sarbanes-Oxley Act m. to establish one, a companyâs CEO and top managers must behavehonorably to set a good example foremployees.

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ACC 333 Lecture : lease and deprication.doc

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