9/16 Chapter 3 Flashcards Preview

ACCT 5410 > 9/16 Chapter 3 > Flashcards

Flashcards in 9/16 Chapter 3 Deck (17):
1

materiality

what effects the judgement of a user of that application or financial statement

2

fraud two types

embezzlement/misappropriation
manipulation

3

override

when a supervisor forces an employee to cook the books

4

collusion

when two people work together to steal from the company

5

fraud triangle

top is the opportunity for fraud
bottom left: incentive and pressures
bottom right: rationalization

6

controls

we have to have these

7

skimming

taking money before it gets to the books

8

larseny

taking cash after it has entered the books

9

shipping fraud

shipping companies don't give the deals they promise

10

kick back

when someone does something that doesn't benefit the company but they will benefit from it.

11

computer control issues

making sure only certain people have authority

12

COSO

Committee of sponsoring organizations
Control Environment - soft control, who is governing the organization? what is managements feelings and objectives
Risk Assessment - what can go wrong
Control Activities - what have we put in place to have controls
Six Control Activities:
1. Segregation of Duties
2. Authorization
3. Documentary Controls - audit trail
4. Safeguarding of assets
5. Reconciliation, Review, and Analysis
6. IT controls
General Computer Controls (GCC)
Application Control
Information & Communication - established policies and procedures and letting your company know what they are
Monitoring - have someone who comes back around and verifies things

13

COSO committee made up of

AICPA - they made this
Institution of internal auditors
FEI - financial executive institutes
CMA
AAA(american accounting association)

14

corporate governance

the amount of control in a corporation

15

ethics

do what you feel to be right

16

audit committee

subset of BOD that should be independent
one of them has to be a financial expert, they don't have to be a CPA
one has to be a chairman
there is an internal and external audit

17

management

sets the policies and procedures as governed by the board