Module 14 Flashcards
What is Internal Control?
We need to safeguard assets, promote efficiency and accurate F/S
What is the point in accounting?
It is to turn data sets into usable information while following GAAP
What is an open system?
They interact with their enviroment
What is a closed system?
They do not interact with their environment`
Why does accounting need theory?
Can be viewed as a profession with rules
What is a conceptual framework?
A theory with holes, but has guidelines
What are some important elements of Conceptual Framework?
Professional and Technical foundations
What are some detailed objectives of accounting?
Relevance and Reliability to make quick and proper decisions
What is an accounting world ruled with Relevance look like?
Cash and Market Values
What is an accounting world ruled with Reliability look like?
Scorecard and Accrual Basis
What are accounting standards?
Specifies how events are recognized and presented
Who is responsible for CPA Handbook?
AcSB or Accounting Standards Board
What is IFRS?
International Financial Reporting Standards
What is ASPE?
Accounting Standards for Private Enterprises
Why is auditors pesky?
They want safe harbors and assurance that we are not cooking books
Why do we need Internal Control?
Safeguard Assets, Promote efficiency and ethics
Why is IC important?
Because it is the glue between trust and F/S
What is Internal Control Hierarchy
4 Goals, 40, Principles and 40,000 Procedures
What are some principles of Internal Control?
Segregation of duties and Documentation Standards
What are some questions that auditors ask on IC?
Effective, Efficient, Continuous and Redundant
What are 2 types of control?
Preventive and Detective
What are some objectives of Revenue Cycles?
Access to records with few, different people handle different assets
What is procedure for cash receipts?
Manager compares total and ultimate security with cheques
What is an audit?
Independent verification with standards
What are types of Audits?
Internal and External
Facts about the Internal Audit?
Employee who serves management and is REAL Accountant
Facts about the External Audit?
Licensed and Specialized in looking for errors
Can F/S readers sue?
Yes for Fraud and negligence
How much liability do auditors have?
Unlimited and risky, they also act as insurance providers too for errors
What is the structure for a public accounting firm?
They are built on partnerships with 18 staff a partner
What is sold by public accounting firm?
Assurance at many levels, Taxation, Consulting and Bookeeping
What are 3 sets for accounting?
Legal, Ethical and Performance
What are 4 categories of Accounting Ethics?
Standards, Relations with peers, Conduct and Public interest
What are some major issues on accounting ?
Exception Gap, Liability and New concepts
Common misconception of Auditors?
They do not guarantee the financial health of a business
Why we need Internal Control?
Assets may disappear and maybe we have cooked books
Why is F/S reporting important?
Cant rely on them and their assets
When do Internal Controls occur?
Happens when a scandal occurs
How do we structure Internal Controls?
Have big goals, then dozen principles and thousands of principals
What are principles of I/C?
Separate recording and custody, rotation of duties
How can we have the best I/C?
Is it effective, efficient, continuous n and redundant
