Internal Control Flashcards
What is the accounting and auditing processes used in a company’s finance department that ensure the integrity of financial reporting and regulatory compliance?
Internal Control
Internal Control is a process for assuring of an organization’s objectives in operational__ and __
Effectiveness, Efficiency
Internal Control is a means by which an organization’s resources are __, __, & __
directed, monitored, and measured
Internal Control __ and prevents __, protecting both __ and __ resources.
detects, fraud, physical, and intangible
Importance of Internal Control
Help comply with Laws and Regulation
Prevent fraud
Improve operational efficiency
Keep asset losses from occurring
Maintain accurate accounting records
Reliable basis for sound decision-making
Name all the Control Principles
Separation of Duties
Process Integration
Management Support
Responsibility
Conscientious Application
Systems Knowledge
Error Reporting
Staffing
Outlier Analysis
Assigning different parts of a process to different people so collusion would be required for someone to commit fraud
Separation of Duties
Controls should be thoroughly intertwined with business transactions that it is impossible for employees not to perform them as part of their daily activities.
Process Integration
Management must make it clear to employees that it thoroughly supports the system of controls.
Management Support
Someone should be assigned responsibility for every control, and that they receive updates on the status of those controls.
Responsibility
Establish a culture that encourages the close examination of control breaches to determine what went wrong and how the system can be adjusted to reduce the risk that the same issue will occur again.
Conscientious Application
Train employees to ensure that they thoroughly understand all aspects of the systems with which they are involved.
Systems Knowledge
In order to know that a control is functioning properly install a system for reporting control breaches.
Error Reporting
There must be an adequate number of employees on hand to operate controls.
Staffing
Is a process that involves identifying the anomalous observation in the dataset.
Outlier Analysis