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Flashcards in Exam 1 Study Guide Deck (67)
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1

COSO

Top:
Operations
Financial Reporting
Compliance
Side:
Monitoring
Information and Communication
Control Activities
Risk Assessment
Control Environment

2

Monitoring

internal auditors

3

information & Communication

ERP system, policies and procedures that tell employees how to act

4

control activities

putting in place activities that prevent fraud

5

risk assessment

Entity Level Objectives - organizational view
Activity Level Objectives - activity view
Risks- make assertions, likelihood, impact
Controls - activities that prevent fraud

6

system

a network of parts that work together to make something

7

information system

converts data into information

8

batch processing

.requires that all similar transactions are grouped together for a specified time, and then this group of transactions is processed as a batch

9

Real Time/OL

the transaction is processed immediately

10

data levels

bit, byte, field, file/tables, relational

11

management information system

provides info that tells how the managers are doing

12

accounting information system

comprises the processes, procedures, and systems that capture accounting data from business processes; record the accounting data in the appropriate records; process the detailed accounting data by classifying, summarizing, and consolidating; and report the summarized accounting data to internal and external users

13

COSO

Committee of Sponsoring Organizations

14

COBIT

.Control Objectives for Information and related Technology

15

ERM

Enterprise risk management, includes methods to manage risk

16

AIS Flow

Source Documents
Journals: special, general
Ledgers: sub, GL
Closing
Reporting

17

Audit Trail

source document, involves numbering of documents and authorization

18

Control Environment

tone of the organization, code of ethics
elements:
integrity and ethical values
Corp governance
Management Philosophy
Org Structure
Assignment of Authority
HR Policy and Practices

19

corporate governance

an elaborate system of checks and balances whereby a company's leadership is held accountable for building shareholder value and creating confidence in the financial reporting process

20

Audit Commitee

structures: component of the board that is independent of the company, not paid by the organization
roles: hires external/internal auditors and oversees audit activity

21

Code of Ethics

SOX requires that all public companies have a code of ethics stated

22

Whistleblowing

Dodd Frank,
SOX 806: made a way for whistleblowers to tell on their companies

23

Risk Prevention what can we do

Have Stewardship(safeguarding of assets)
Provide fair and transparent and full reporting and disclosure
Design and implement internal controls
Enforce a code of Ethics

24

Types of fraud

misstatement
misappropriation

25

misstatement

manipulation of records

26

collusion

two people working together to commit fraud

27

misappropriation

taking assets

28

fraud triangle

Incentive Opportunity and rationalization

29

categories of fraud

management - override
employee - taking assets
customer - returning stolen goods
vendor - shipping, getting paid more than earned

30

Examples of fraudulent financial reporting

smooth earnings - saving earnings for next quarter
revenues - making it up
omitted disclosures/exp
Window dressing
Pad assets
Off balance sheet