Controls and AIS

Question 1

What are internal controls?

Answer 1

safeguard assets

Question 2

Types of internal control

Answer 2

general control
- make sure information system is stable and well-managed

Application
- prevent, detect and correct transaction errors and fraud

Question 3

Functions of internal control

Answer 3

1. preventative controls
   - deter problems before they arise
   segregation of duties
   hiring quality staff
   controlling physical access to assets
2. detective controls
   - duplicated checking of calculations
   - reconciling bank statements
   - monthly trial balances
3. corrective controls
   - files backup
   data entry validation
   exception incident alerts

Question 4

What is foreign corrupt practices?

Answer 4

prevent companies from bribing foreign officials to obtain business

Question 5

What is the Sarbanes Oxley Act

Answer 5

prevent financial statement fraud

Question 6

What are the SOX changes to the professional accounting practices?

Answer 6

1. created a board to control auditing professional standards
2. partner with international securities exchange commission
3. new rules for auditors
4. must be on board of directors and a financial expert
5. CEO must certify the fair accuracy of financial statements
6. statement to declare management is responsible for maintaining internal control system