B1- Corporate Governance/Operations Management Flashcards
5 Components of COSO’s Internal Control
It would be a CRIME if you forgot the components of internal control
- C- Control Environment
- R- Risk Assessment
- I- Info & Communication Systems
- M- Monitoring
- E- Existing Control Activities
Internal Control: CRIME
Control Environment
The Control Environment is often PHRASED as the “tone at the top”
- P- Philosophy and Op Style of Man
- H- Human Resources
- R- Reporting (Financial) Competencies
- A- Authority and Responsibility
- S- Structure (organizational)
- E- Ethical Values (& Integrity)
- D- Directors
ERM:
4 Categories of Enterprise Objectives
SORC
- Strategic- High level goals designed to achieve a mission, Shareholder Value Inc
- Operations- achieve obj through offective and efficient use of res, ROIC > Cost
- Reporting- achievement of reliable reporting
- Compliance- ensure compliance with laws and regulations (ETHICS)
Components of ERM
IS EAR AIM
- I- Internal Environment (PHRASED C) – C
- S- Setting Objectives (SORC)
- E- Event Identification
- A- Assessment of Risk – R
- R- Risk Response – R
- A- Activities (control) – E
- I- Info & Communication – I
- M- Monitoring/reporting deficiencies – M
ERM:
IS EAR AIM
Internal Environment
“The tone at the top” is how the Internal Environment is often PHRASED C
- P- Philosophy of Risk Management
- H- Human Resource Standards
- R- Risk Appetite/Response
- A- Authority and Responsibility
- S- Structure (organizational)
- E- Ethical Values (& Integrity)
- D- Directors
- C- Commitment to Competence
ERM:
IS EAR AIM
Event Identification
Event Workshop- “hire experienced facilitator to stimulate a discussion from a cross-functional group representing different areas throughout the company”
ERM:
IS EAR AIM
Assessment of Risk
Event Inventory- significant component of risk assesment is the identification of events that might impede the achievement of objectives
Develop a listing of potential events common to a specific industry or functional area
Most frequent objectives of cost accounting systems are …
PIE
- Product Costing- Inv, COGM, COGS
- Income Determination- Profitability
- Efficiency Measurements- Comp to std
Cost of Goods Manufactured (COGM)
Formula
Beg WIP
+ DM used
+ DL
+ MOH Applied
= Total Manu Costs Avail
- End WIP
= COGM
Cost of Goods Sold (COGS)
Formula
Beg Inv
+ COGM/Purchases
= COGAS
- End Inv
= COGS
Process Costing
- Use WA or FIFO to det Equiv Units (EU)
- Det cost/EU
Process Costing:
Weighted Average Method
2 Steps
WA EU
Units Completed
+ End WIP * % Complete
= WA EU
WA = Beg Costs + Current Costs
EU
Process Costing:
FIFO Method
3 Steps
FIFO EU
Beg WIP * % to complete
Units Started & Completed
+ End WIP * % Complete
= FIFO EU
FIFO = Current Costs
EU
Engineered Cost
a cost that bears an observable and known relationship to a quantifiable activity base
ERM:
Event Identification
Events can only be identified after the organization objectives have been identifies.
