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ADM 4346 > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

What are internal control

A

is a process that specifically mitigates risk to the company financial information

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2
Q

What can internal control do

A

Create quality info
Identify financial issue
Prevent fraud
Increase operating efficiency
Ensure compliance with laws and regulation
Lessen the risk of financial misstatement

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3
Q

What are the function of Internal control

A

Prevent
Detect
Correct

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4
Q

What are preventive Control

A

Precent problem from happening ex: Segregation of duties

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5
Q

What are Detective control

A

alert the management to an issue once it has occurred. They identify problems like fraud, legal compliance and quality control

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6
Q

What are corrective controls

A

these are the changes you makes after an undesirable outcome occur after the risk has occurred

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7
Q

Explain management override

A

this is when the internal control dont work due to management not following the policy or procedure

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8
Q

Explain the time based model of control

A

This measure the residual risk for technology attacks by comparing the relationship of the three control functions

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9
Q

Whats the time base model of control formula

A

P>(D+C)

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10
Q

What are three locations for controls

A

Physical control ( human actives )
IT General Control (
IT Application Control

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11
Q

It general controls

A

Apply to the entire operation of the full systems and it environment ( emails, web browsers, time keeping software)

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12
Q

What are the two methods of implementing control

A

Manual
automated

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13
Q

Whats does implementing manual control requires

A

it requires human judgement or physical interaction .
Risk and error and manipulation

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14
Q

What are automated control implementation

A

use technology to implement control activities. This increased reliability and consistency

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15
Q

Continuous Monitoring technology are use for

A

create detective controls that use rules based programming to monitor the business data for red flags risk

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16
Q

Whats are the three lines of defense

A

first = Business operation ( management)
second: Risk management and Compliance ( management)
Third : Internal audit)

17
Q

First line of defense role

A

Provision of products or services to client to managing risk

18
Q

Second line of defense role

A

Support monitor and challenge on risk related matter

19
Q

Third line of defense role

A

Independent and objectives assurance and advice on all matters related to achieve the objectives

20
Q

What is the maturity Model

A

This show how far the company is to achieving its ideal state by comparing the current one to a predetermine set of practices

21
Q

What are the four phase of Maturity model

A

Limited
Informal
Defined
Optimized

22
Q

Limited on the maturity Model means

A

the company is poorly defined and the employees have multiple ways to achieve the same outcomes.

23
Q

Informal process
reliance on key individual
Ad hoc controls

What maturity model phased these are

A

Phase 1 Limited

24
Q

Informal on the maturity model means

A

Some processes and controls are defined but the documentation , inconsistencies and reliance on key individual still exist

25
Q

Defined on the maturity model means

A

Policies,procedures and controls are formally document which creates a consistent environment where key employees are no longer relied on

26
Q

Optimized on the maturity model means

A

the gold standard in the process of maturity model

27
Q

Clearly defined controls
Formal documentation
Clearly defined process
No reliance on key individual

Whats phase on the maturity model is it

A

Phase 3 : Defined

28
Q

Top down approach, proactive approach
Internal audit provide strategic values
Clear communication

Whats phase on the maturity model is it

A

Phase 4 : Optimized

29
Q

Some defined processes
Lack of documentation
Primarily manual control
reliance on key individual

Whats phase on the maturity model is it

A

Phase 2 : Informal

30
Q

When doing an internal audit we must have

A

Assurance
Insight
Objectivity

31
Q

What is a framworks

A

publish a set of specification and criteria that defines a strategies to achieve a certain objectives. Like a set of instructions for business to follow . ex: road maps

32
Q

What is Sarbanes- Oxley Act ( SOX)

A

Is to protect investors from fraud and other risk by improving the reliability of financial statement

33
Q

What are the key part of COSO Frameworks

A

Control Objectives
Component and related principles
COSO Cube

34
Q

What are the control objectives

A

Operations
Reporting
Compliance

35
Q

what are the fives steps of Component

A

Control environment
risk assessment
Control activities
Information and communication
Monitoring

ADM 4346 (13 decks)

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