Term
| What are the objectives of Internal Controls? |
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Definition
| To make sure there is reliability of financial reporting, efficiency and effectiveness of operations, and compliance with laws and regulations |
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Term
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Definition
“Internal Control is a process affected by an activity’s Board of Directors, management, or other personnel – designed to provide reasonable assurance regarding the achievement of objectives in the following categories
Reliability…
Effectiveness…
Compliance……” |
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Term
| What are the five components of Internal Control? |
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Definition
| Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring |
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Term
| What is included in the control environment? |
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Definition
| Integrity and ethical values, Commitment to competence, and Board of directors or audit committee participation, management’s philosophy and operating style, organizational structure, human resource policies and practices |
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Term
| What does Risk Assessment do? |
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Definition
- Identify factors that may increase risk
- Estimate the significance of the risk
- Assess the likelihood of the risk occurring
- Determine actions necessary to manage the risk |
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Term
| What are some control activities? |
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Definition
1. Adequate separation of duties
2. Proper authorization of transactions and activities
3. Adequate documents and records
4. Physical control over assets and records
5. Independent checks on performance |
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Term
| What are some Adequate Separation of Duties |
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Definition
- Custody of assets from Accounting
- Authorization of transactions from The custody of related assets
- Operational responsibility from Record-keeping
responsibility
- IT duties from User departments |
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Term
| What are some ways to have Adequate Documents and Records |
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Definition
- Prenumbered consecutively
- Prepared at the time of transaction
- Designed for multiple use
- Constructed to encourage correct preparation |
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Term
| What is the most important type protective measure for safeguarding assets? |
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Definition
The most important type of protective
measure for safeguarding assets and
records is the use of physical precautions. |
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Term
| Why do independent checks arise? |
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Definition
The need for independent checks arises
because internal control tends to change
over time unless there is a mechanism
for frequent review. |
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Term
| What is the purpose of an accounting information and communication system? |
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Definition
The purpose of an accounting information and communication system is toinitiate, record, process, and report
the entity’s transactions and to maintain accountability for the related assets. |
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Term
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Definition
| Monitoring activities deal with management’s ongoing and periodic assessment of the quality of internal control performance to determine whether controls are operating as intended and modified when needed. |
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Term
| What are the four types of controls? |
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Definition
| Preventive, Detective, and Corrective |
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Term
| What are the three elements of controls? |
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Definition
| Input, Processing, and Output |
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Term
| What are the means of achieving controls? |
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Definition
Organization
Policies
Procedures
Personnel
Accounting
Budgeting
Reporting |
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