Week 5 - Categorising Internal Controls Flashcards
What is the mnemonic for remembering the way to categorise internal controls?
SOAPSPAM
What does the first S stand for?
Segregation of duties
What does the O stand for?
Organisational controls
What does the A stand for?
Authorisation and approval
What does the P stand for?
Physical controls
What does the second S stand for?
Supervision
What does the second P stand for?
Personnel
What does the second A stand for?
Arithmetical procedures
What does the M stand for?
Management
Organisational controls
Being clear who has what role and what they are responsible for / having individual controls in place
Authorisation and approval
e.g Delegation of authority - each department having a limited amount they can spend - if needs increasing goes to someone higher in the hierarchy to approve i.e director
Physical control
e.g safe to put money in or desks bolted down - can’t pick it up and take it away
Personnel
e.g a strict hiring process
Arithmetical procedures
e.g systems adding up, numbers on invoice, bank reconcilliation
Management
Management making a decision to improve/control things e.g comparing budgets and actuals and taking corrective action
