Internal Control Definition Chapter 07 Internal Control A process, effected by the entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding, achievement of (the entity’s) objectives on: Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. 7-2 Control Objectives
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were not satisfied with the valuation of the client’s inventories. KEY USERS & CONCERNS: The main users of Burnaby Wholesalers include: * Owners/Shareholders who are concerned about profitability and sustainability of the company. * Management/CEO of the company who would be interested in showing increased earnings and profitability of the company to earn bonuses/incentives, etc. * Investors/Bankers whose primary concern is the profitability and cash flow of the company to ensure
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will focus on the analysis of four issues and discuss how the Sarbanes-Oxley Act affected the following subjects: A. 1. Audit committees of public company board of directors responsibilities since SOX 2. Sarbanes-Oxley section 404 on internal control 3. The accuracy of public company financial statements and the cost of capital for public companies 4. The main advantages and disadvantages of Sarbanes-Oxley Act B. Can legislation guarantee the accuracy of public company financial statements
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Internal Controls Latosha Bonita James American InterContinental University Abstract This paper will explain the accounting department and limitations of the internal control system. The internal control system and adjusting entry for 3 months at $500 per month. After reading this essay one will learn 3 limitation and 2 examples of internal control procedures. Along with the symptoms of lack of internal control and the impact of a missing journal on the financial statements
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Audit Risk = Inherent Risk x Control Risk x Detection Risk Inherent Risk is one of the major items or topics that are a part of auditing and here is what I have found. It is considered to be a risk of material misstatement in the financial statements arising due to error or omission as a result of factors other than the failure of controls. Factors that may cause a misstatement due to absence or lapse of controls are considered separately in the assessment of control risk. Inherent risk is also
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corporate scandals that rocked the business world. Foremost of which is the Enron debacle which was followed by WorldCom, Tyco International and Global Crossing (CIO Decisions). The collapse of these businesses was attributed to the lack of regulatory controls in the part of the government as well as transparency of operations of corporations which can be of help to its stakeholders in the analysis of profitability and assurance of good governance to the public. They importance of the Act lies on the accountability
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CONTROL AND AIS (Version 1 – Brief, just for the exam) Overview of Control Concepts * Internal Control - plan of organization and the methods a business uses to safeguard assets, provide accurate and reliable information, promote and improve operational efficiency and encourage adherence to prescribed management procedures. * Management Control - broader than internal control 1. Integral part of management responsibilities. 2. Is designed to reduce errors and irregularities
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Financial Reporting and Disclosure Corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company Importance of Corporate Governance Disclosures * Stakeholders are paying more attention to what is reported * The global financial crisis has sharpened the lens through which corporate governance structures are held to account
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CASE 2 – ALOHA PRODUCTS Background Point of View Problem Statement Framework for Analysis Analysis 1. Evaluate the current control systems for the manufacturing, marketing and purchasing departments of Aloha Products. Aloha Products maintains a centralized control system, which does not give the plant managers enough control on any major activities of the production facility. Specifically, plant managers have no jurisdiction and influence on the processes before and after
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Adelphia Communications Corporation was a cable company, whose owners, John Rigas and his son Timothy,” were charged with bank fraud, securities fraud, and conspiracy.” (Reference #4) They were charged with all fifteen accounts of securities fraud. Another son of his was acquitted, as well as the former treasurer, Michael Mulcahey. “John and Timothy now face 30 years in prison because of the bank fraud charge.” (Reference #4) “They were charged with hiding over $2.3 billion dollars’ worth of
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