. Internal Control -- Purchases, Payroll, and Other Cycles Flashcards
To Safeguard trading securties the company
obtain?
An independent trust company that has no direct contact with the employees having record keeping responsibilities, holds in their possession the securities.
What is an essential element of EDI electronic interchange system?
The ability to look at the activity logs indicating failed transactions.
Safe-deposit box is a bank’s responsibility in which access should be limited to authorized users and required the presence of 2 employees to avoid?
An employee from temporary removing the securities and using it as pledge for a loan.
In an EDI Electronic Data Interchange system, the opportunity to apply detective controls is often limited, therefore?
Preventive controls are more important than detective controls.
A Reasonableness test, restricts an amount to an appropriate range. Therefore,
entering an amount higher than the range, will provide an alert.
What is regarded as the greatest risk of EDI?
Improper distribution of EDI transactions since no humans are involved and transactions are transmitted from computer to computer.
Control activity that ensures proper input of information is?
Preformatted screens
When can a CPA charge a fee for services contingent upon finding a specific Result?
A contingent fee is an agreement where the amount of the fee depends upon the findings or results. If the fees are fixed by court or other public authority or tax matter, then they are not contingent.
contingent fees are prohibited and only allowed if Fixed by court or other authority or tax matter.
The ideal structure in a segregation of duties is divided into this three functions?
- Authorization of the transaction
- Recording of the transaction
- Custody of the asset from the transaction.
The data dictionary is a file manual but usually computerized. The record relates to specific data item, a payroll application is an example. What is included in this file?
It contains definition of data records, files, and a list of programs used to process the data records and file.
Payroll preparation and maintenance of year to date records is not needed because?
both duties involve recordkeeping.
Elements of Audit Trail in EDI?
using the internet to transmitt EDI instead of VAN allows for the information to be sent in real time which means?
Sending the information as the transaction takes place.
When referring to the security of messages,
Encryption is better choice than authentication of messages.
Encryption that is performed by a phycially hardware device is more secure than encryption performed by ?
Software
