5. internal control Flashcards
what is internal control
objectives to prevent/detect fraud or error
taken on by management
what are the reasons for internal controls
SCARE
Safeguard assets
comply with laws and regulations
accurate financial reporting
reduce fraud
efficient running of business
what are limitations of internal controls
LETTERS
CHEW
CHEW
what are limitations of internal controls
Collusion
Human element - person operating controls makes a mistake
expensive
weird transactions - system not used to
what are the components of internal control
what is the auditor concerned about checking and reviewing
CRIMET
control activities
risk management
IT systems
monitoring
environment
tech advancement
what makes up the control environment
vibes of management
audit committees = oversees
what makes up the risk assessment process
identifying business risks and actions to manage
what makes up information systems
financial reporting system
transactions initiated, recorded, processed, corrected, reported
what are the control activities implemented by managers
LETTERS
PARISV
PARIS V
what are the control activities implemented by managers
Physical controls
Authorisation
Reconciliations - comparing
Information processing
Segregation of duties
Verifications
what are information processing controls
controls within the IT systems
- passwords in accounting systems
- permitted range
- digit verification
- screen warnings
what are general controls
controls for outside the system
- passwords
- training
- virus checks
what are technological advancements
