Controls & COSO Framework - Repetitive Study Flashcards
Sarbanes Oxley new regulation requirements:
1) Public companies required to have audit committee (must have 1 financial expert).
2) Whistleblowers will be compensated. (10-30%)
3) Anti-retaliation provision which protects whistleblowers from losing their job.
Financial Expert:
Has:
1) An understanding of GAAP & financial stmts.
2) Experience in preparing or auditing financial stmts.
3) Experience with internal auditing controls.
Objective of Internal Control
To have effective & efficient operations, reliable fin reporting, & be compliant with laws & regulations.
Categories of Controls:
Preventative
Detective
Corrective
Preventative Controls
Prevent an error BEFORE it occurs.
Detective Controls
Designed to detect an error AFTER it has occurred.
Corrective Controls
Meant to reverse the effects of an error.
Feedback Controls
Procedures where the results of a process are evaluated. If results are undesirable, the process is adjusted to modify the results.
Application Controls
Controls over the data input & processing meant to ensure the accuracy, completeness, & validity of transaction processing.
COSO Integrated Framework Components
CRIME Control Environment Risk Assessment Info & Communication Monitoring Control Activities
Control Environment
“Tone @ the Top”
Management’s philosophy towards internal control & responsibility.
Risk Assessment
Process of identifying & managing risks.
Information & Communication
The systems that allow a company’s employees to identify & exchange info regarding controls & operations.
Monitoring
Monitoring the company’s data & its systems.
Control Activities
The policies & procedures implemented to ensure actions are taken towards completing the company’s objectives.
