ACING MBA 510 CHAPTER 6 EXAM WITH THE LATEST A+ QUESTIONS AND ANSWERS STUDY COMPANION.

ACING MBA 510 CHAPTER 6 EXAM WITH THE LATEST A+ QUESTIONS AND ANSWERS STUDY COMPANION. Policies and procedures used to monitor and control business activities internal control system 4 purposes of internal control protect assets ensure reliable accounting promote efficient operations uphold company policies Requires managers and auditors of companies whose stock is traded on an exchange to document and verify internal controls Sarbanes-Oxley Act (SOX) Requirements of Sarbanes Oxley Act (SOX) must have effective internal controls auditors must evaluate controls harsh penalties- up to 25 years audit is over seen by PCAOB Lists 5 ingredients of internal control that add to the QUALITY of accounting information Committee of Sponsoring Organizations (COSO) 5 ingredients of internal control that add to the QUALITY of accounting control environment risk assessment control activities info and communication monitoring Internal control varies from company to company but internal control applies to ALL companies 7 principles of internal control establish responsibilities maintain adequate records insure assets and bond key employees separate recordkeeping from custody of assets divide responsibility for related transactions apply technology controls perform regular and independent reviews 7 principles of internal control: responsibility for a task is clearly established and assigned to one person; can be difficulty to determine if fault if not completed; ex: separate cash drawers for each clerk establishing responsibilities 7 principles of internal control: good recordkeeping, detailed reports, less likely to be entered wrong if chart of accounts is used, preprinted forms, prenumbered slips, computerized point of sale maintain adequate records 7 principles of internal controls: assets should be insured against losses, and employees handling lots of cash should be bonded (company purchases insurance policy against theft by that employee) insure assets and bond key employees 7 principles of internal control: someone who controls an asset must not have access to that asset's accounting records; to steal an asset and hide the theft from records, two or more people must collude to commit fraud separate recordkeeping from custody of assets 7 principles of internal controls responsibility should be divided by two or more departments; separation of duties does NOT mean duplication of workl divide responsibility for related transactions 7 principles of internal controls cash registers, time clocks, ID scnanners. technology controls 7 principles of internal controls regular reviews by auditors not directly involved in the activities perform regular and independent reviews auditors evaluate the _________ and ______ of internal controls efficiency and effectiveness Auditors test the company's __________________ and evaluate the effectiveness of internal controls financial records Principles of internal control are relevant no matter the _______________ state of the accounting system technological