Chapter 8

Question 1

Internal controls

Answer 1

organizatoional plan to safeguard assets, , encourage policy compliance, promote operation efficiency, and ensure accurate & reliable accounting methods

Question 2

COSO- Comittee of Sponsoring Organizations

Answer 2

Committee that provides insight into risk management, internal controls, and fraud deterrence

Question 3

Public Companies

Answer 3

Sell stock to the public

Question 4

SOX Sarbanes Oxley

Answer 4

Requires Companies to review internal control and take responsibility for the accuracy and completeness of their reports

Question 5

internal control report

Answer 5

report by management describing its responsibility for and adequacy of internal controls for financial reporting

Question 6

external auditors ensure

Answer 6

the accuracy and completeness of financial reports

Question 7

Auditors are overseen by the

Answer 7

PCAOB Public Company Accounting Oversight Board

Question 8

Auditing firms cannot provide ____ services to their Audit Clients

Answer 8

Consultation

Question 9

Violation of SOX is punishable up to

Answer 9

25 yrs in prison for securities fraud and 20 years for making false sworn statements

Question 10

Components of internal control:

C
R
I
M
E

Answer 10

Control Procedures, Risk Assessment, Information System, Monitoring of Controls, Environment

Question 11

internal auditor is an _____ who ensures employees are following ____ ____ and ___

Answer 11

employee; company policy, Efficiency

Question 12

Ethical hiring, good pay, good benefits, treat them well, and adequate supervision are examples of

Answer 12

Personnel controls

Question 13

titles and positions are an example of

Answer 13

assigned responsibility

Question 14

separating operations from accounting and maintaining separate custody of assets are examples of

Answer 14

separation of duties

Question 15

an examination of a company’s financial statements and accounting system

Answer 15

Audits

Question 16

back up, receipts, PO’s, and source documents are examples of

Answer 16

documentation

Question 17

antitheft sensors are

Answer 17

electronic controls

Question 18

encryption and firewalls are examples of

Answer 18

digital safeguards

Question 19

vaults, alarms, and security are examples of

Answer 19

physical safeguards

Question 20

Internal controls are often overcome by

Answer 20

collusion

Question 21

internal controls may be overlooked due to

Answer 21

cost or efficiency

Question 22

receipts and cash registers are an example of an over the counter ___ _____ ____

Answer 22

cash receipt control

Question 23

to control cash receipts by mail , we should separate the ____ and _____

Answer 23

check; remittance

Question 24

lockbox systems

Answer 24

a PO box owned by a bank. th ebank deposits all the checks daily.

Question 25

ERS Evaluated receipt settlement

Answer 25

compares the receiving report to the purchase order and pays

Question 26

Electronic Data interchange EDI

Answer 26

eliminates paper invoiceing, and electronically communicates between customer and company software to automate billing and payment.

Question 27

a small fund to pay for minor expenditures

Answer 27

Petty cash

Question 28

petty cash is the least controlled asset and to control it one must designate a ______ limit the amount of ___ available, and support all transactions with _____

Answer 28

custodian, cash, documentation

Question 29

petty cash is it's own T account, and exists as an ___

Answer 29

asset

Question 30

imprest system

Answer 30

a way t o account for petty cash by maintaining a constant balance . at any time cash and receipts must reconcile.

Question 31

missing petty cash funds go to an expense account called

Answer 31

cash short and over

Question 32

signature cards are an example of

Answer 32

bank controls