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BEC > B1: Corporate Governance and Operations Management > Flashcards

B1: Corporate Governance and Operations Management Flashcards

1
Q

What are the 3 categories of objectives within the internal control framework?

A

ORC
Operations - effectiveness and efficiency of operations, safeguarding against losses
Reporting - reliability, timeliness, transparency
Compliance - ensure adherence to applicable laws and regulations

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2
Q

What are the 5 components of internal control?

A

CRIME
Control Environment - tone at top (ethics)
Risk assessment - f/s misstated or fraud
Information and communication - fair, accurate, complete, timely (FACT)
Monitoring - efficiencies of IC, report deficiencies
Existing control activities - policies/procedures to mitigate risk

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3
Q

What are the 5 principles related to the control environment?

A 
EBOCA
Commitment to ethics and integrity
Board independence and oversight
Organizational structure
Commitment to competence
Accountability
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4
Q

What are the 3 steps for Risk Assessment?

A

EAR
Event identification
Assess risk
Respond to risk

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5
Q

What are the requirements of effective internal control?

A

reasonable assurance entity’s objectives will be achieved

all 5 components and 17 principles that are relevant be BOTH present and functioning
present - included in design
functioning - operating as designed
all operating together as an integrated

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6
Q

What are the requirements of effective internal control?

A

reasonable assurance entity’s objectives will be achieved

all 5 components and 17 principles that are relevant be BOTH present and functioning
present - included in design
functioning - operating as designed
all operating together as an integrated

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7
Q

What are the components and order of ERM?

A

IS EAR AIM (broader in scope than just financial reporting objectives)

Internal environment
Setting objectives

Event identification
Assessment of risk
Risk response

Control Activities
Information and communication
Monitoring

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8
Q

What are the elements of the ERM internal environment component?

A 
EBOCA HR
Commitment to ethical values and integrity
Board oversight
Organizational structure
Commitment to competence
Accountability

HR standards
Risk management philosophy and risk appetite

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9
Q

What are the elements of the ERM internal environment component?

A 
EBOCA HR
Commitment to ethical values and integrity
Board oversight
Organizational structure
Commitment to competence
Accountability

HR standards
Risk management philosophy and risk appetite

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10
Q

What does monitoring consist of?

A

Ongoing/separate evaluations

Communicating deficiencies

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11
Q

What does SOX Section 407 requires that the financial expert have?

A
  • understanding of GAAP and financial statements
  • be able to assess the application of accounting principles
  • comparable experience applying accounting principles to entities that present a similar level of complexity of the issuer
  • understand both internal controls and audit committee functions
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12
Q

What did SOX put in place to address the problem of inadequate board oversight?

A

Audit committee requirement

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13
Q

What 3 things are specifically required by SOX in the code of ethics?

A

Honest and ethical conduct
Full, fair, accurate, and timely disclosure
Compliance with laws, rules, and regulations

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14
Q

What is included in management’s report on internal control?

A

Mgmt’s responsibility for IC
Assessment of effectiveness of IC
Statement that auditor has reported on mgmt’s evaluation of IC

Mgmt does NOT describe disagreements

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15
Q

What is included in management’s report on internal control?

A

Mgmt’s responsibility for IC
Assessment of effectiveness of IC
Statement that auditor has reported on mgmt’s evaluation of IC

Mgmt does NOT describe disagreements

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16
Q

Who created COSO (Treadway Commission) ?

A

American Accounting Association (AAA)
American Institute of Certified Public Accountants (AICPA)
Financial Executives Institute (FEI)
Institute of Internal Auditors (IIA)
Institute of Management Accountants (IMA)

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17
Q

Who created COSO (Treadway Commission) ?

A

American Accounting Association (AAA)
American Institute of Certified Public Accountants (AICPA)
Financial Executives Institute (FEI)
Institute of Internal Auditors (IIA)
Institute of Management Accountants (IMA)

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18
Q

What are the 4 responses to risk?

A

Assume/accept (doing nothing)
Avoid (discontinuing)
Reduce (relocating)
Transfer/share (insuring)

19
Q

What is inherent risk? residual risk?

A

risk if no response by mgmt

risk left over after mgmt responded

20
Q

What are control activities?

A

Methods to implement risk response

21
Q

The board of directors has a ________ responsibility to act on behalf of and in the best interest of the corporation

A

fiduciary

22
Q

The board of directors has a ________ responsibility to act on behalf of and in the best interest of the corporation

A

fiduciary

23
Q

What are the 4 objectives within HRM?

A 
SORC
Strategic
Operating
Reporting
Compliance
24
Q

When is a related contract from a corporation’s director not voidable?

A

When fair to the company

Full disclosure & approved by directors or shareholders

25
Q

When does event identification occur?

A

After development of objectives

26
Q

What are the components and order of COSO’s ERM framework?

A

IS EAR AIM (broader in scope than just financial reporting objectives)

Internal environment
Setting objectives

Event identification
Assessment of risk
Risk response

Control Activities
Information and communication
Monitoring

27
Q

What does monitoring consist of?

A

Ongoing/separate evaluations

Communicating deficiencies

28
Q

When does event identification occur?

A

After development of objectives

29
Q

What is the penalty for securities fraud?

A

Fines or prison up to 25 yrs

30
Q

What does change control consider?

A

manner in which management monitors and authorizes changes to a variety of information

31
Q

How does COSO define ERM?

A

process, effected by an entity’s board of directors, mgmt, and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives

32
Q

What are the objectives of cost accounting systems?

A

Product costing
Income/profitability determination
Efficiency measurements

33
Q

What are prime costs vs. conversion costs?

A

DL + DM

DL + MOH

34
Q

What are prime costs vs. conversion costs?

A

DL + DM

DL + MOH

35
Q

How is overhead applied in traditional costing?

A

Step 1: calculated OH rate = budgeted OH costs / estimated cost driver
Step 2: applied OH = actual cost driver x OH rate

36
Q

What is the formula for COGM?

A 
Beginning WIP
\+ (DM used, DL, MOH applied)
Total mfg costs available
- Ending WIP
COGM --> to COGS
37
Q

What is the formula for COGS?

A 
Beginning FG inventory
\+ COGM
COGAFS
- Ending FG inventory
COGS
38
Q

What is the formula for COGS?

A 
Beginning FG inventory
\+ COGM
COGAFS
- Ending FG inventory
COGS
39
Q

How do we calculate Equivalent Units of production using the weighted-average method?

A

Units completed

Ending WIP x % completed

40
Q

How do we calculate Equivalent Units of production using the FIFO method?

A

Beginning WIP x % to be completed
Units completed - Beginning WIP
Ending WIP x % completed

41
Q

How do we calculate Equivalent Units of production using the FIFO method?

A

Beginning WIP x % to be completed
Units completed - Beginning WIP
Ending WIP x % completed

42
Q

How are costs per equivalent unit calculated for the weighted average and FIFO methods?

A

Beginning + current cost / equivalent units

Current cost only / equivalent units

43
Q

What is the total factor productivity ratio?

Partial productivity ratio?

A

Output / total costs

Output / specific quantity

44
Q

What are the 4 common elements in manufacturing processing?

A

manpower
machinery
method
materials

BEC (6 decks)

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