1: corporate governance Flashcards
What are the four topics that pertain to financial reporting?
Public Accounting audit Committees
corporate responsibility for financial reports
improper influence on conduct of audits
forfeiture of certain bonuses and profits
What are the responsibilities of the audit committee?
Appoint, compensate and oversee auditor
What are the independence requirements for an audit committee member?
independent member of board
cannot accept consulting fees
cannot be an affiliated person
An audit committee establishes complaint procedures that include:
receive, retain, and treat complaints regarding accounting, auditing, and internal controls.
confidential or anonymous submissions.
Corporate responsibility of CEO and CFO
must certify that annual and quarterly reports are reviews, contain no material untruth, and statements are fairly stated.
Corporate responsibility of CEO and CFO regarding internal controls
must certify that officers are responsible for establishing and maintaining internal controls, designed to ensure that material info is provided to internal and external users, evaluate effectiveness.
What must the CEO and CFO report to audit and audit committee?
all significant deficiencies in the design or operation of internal controls
any fraud, material or not, that involve management
SOX prohibits improper influence on the conduct of audits defined as:
No officer can influence, coerce, manipulate, or mislead an independent CPA engaged in an audit.
What are the financial Penalties on officers who are responsible for materiel misstatements resulting from their misconduct?
refund any bonus during last 12 months,
refund any profits from sale of securities in last 12 months
Disclosures related to periodic reports
financial statements disclose all material off balance sheet transactions
proforma financial statements shall include all relevant info and shall not include misleading info
what qualifies an individual as a financial expert?
understanding of GAAP
experience in presentation of auditing FS
application of GAAP
experience with internal controls
understanding of audit committee functions
Components of COSO internal control integrated framework
Control Environment- managements philosophy towards controls. core of any system of internal control
Risk Assessment- process of identifying, analyzing and managing risk
Information and Communication- identify, process, exchange into needed to manage and control operations
Monitoring-ongoing reliability of info by monitoring and testing data
Control Activities-policies and procedures that ensure actions are taken to address risks related to achievement of management objectives
what are the 5 principles associated with controls enviorment
commitment to ethics and integrity board independence and oversight organizational structure commitment to competence accountability
what are the 4 principles associated with risk assessment
specify objectives
identify and analyze risk (risk assessment)
consider potential for fraud
identify and assess change management
what are the 3 principles associated with control activities
select and develop control activities (risk reduction)
select and develop tech controls
deploy through policies and procedures
what are the 3 principles associated with info and communication
obtain and use info
internally communicate info
communicate with external parties
what are the 2 principles associated with monitoring
ongoing and separate evaluation
communication of deficiencies
name and describe 3 objectives within coso framework
operating: effectiveness and efficiency of entitys operations
reporting: reliability, timeliness and transparency of an entitys reporting
compliance: necessary to ensure the entity is adhering to all laws and regulations
What themes does the ERM framework encompass?
aligning risk appetite and strategy enhancing risk response decisions reducing operating surprises and losses identifying and managing multiple and cross enterprise risks seizing opportunities improving deployment of capital
What are the components of COSO ERM framework?
internal environment objective setting event identification accountability risk response control activities info and communication monitoring
how does the internal professional practices framework define internal auditing?
internal auditing is an independent and objective assurance and consulting activity designed to add value and improve an orgs operations
internal auditing adds value and helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the following: risk management, control, governance processes
describe the attribute standards of internal standards for the practice of internal auditing
address issues related to auditor independence, technical proficiency, and professional care
describe the performance standards of the international standards for the practice of internal auditing
address planning and supervision of the engagement, documentation of evidence or basis for conclusions and generic reporting requirements
what are implementation standards of internal standards for the practice of internal auditing
embedded within the attribute and reporting standards to address the requirements of implementing both assurance and consulting activities
identify and describe the 4 elements of the code of ethics adopted by international standards
integrity: internal auditors are to perform work with honesty, diligence, and responsibility, observing both law and organization objectives
objectivity: internal auditors exhibit professional objectivity in gathering, evaluating, and communication info and should not participate in relationships that represent conflicts of interest
confidentiality: internal auditors do not disclose info without appropriate authority or use info for personal gain
competency: internal auditors apply the knowledge, skills, and experience needed in the performance of internal auditing services.
what are the 4 headings of attribute standards
purpose, authority, and responsibility
independence and objectivity
proficiency and due professional care
quality assurance and improvement program
what are the 7 headings of performance standards
managing the internal audit activity nature of work engagement planning performing the engagement communicating results monitoring progress managements acceptance of risk
