Internal Control Flashcards
(11 cards)
1
Q
General controls comprise of…
A
- segregation of duties
- supervision
- controls over systems development, implementation and maintenance
2
Q
Segregation of duties
A
If different people handle different parts of the same transaction they act as a control on each other - reducing the chance of mistakes not being picked up
3
Q
Segregation of duties may occur between:
A
- Authorisation
- Custody
- Recording
- Review
- Maintenance
4
Q
Supervision ensures that:
A
- procedures are properly completed
- errors are corrected
- systems are changed when there’s weaknesses
- systems are developed that meet the needs of new transactions
5
Q
Supervision should preferably be carried out by specific observable routines and be evidenced by:
A
- initialling of reconciliations
- completed checklists
- written reports
6
Q
Signs of inadequate supervision
A
- late production of FS, reports etc
- an excessive no. of errors and exceptions
- an air of chaos or permanent crisis in a department
7
Q
controls over systems development, implementation and maintenance examples
A
- approval of written specifications by appropriate management
- testing of applications by specialist and users
- obtaining final approval for implementation
- involvement of accounting personnel and internal auditors in the design of systems and selecting of software
8
Q
Application controls definition
A
Controls over the capture and processing of accounting information. Such as:
- data capture
- data processing
9
Q
data capture controls include
A
- authorisation and approval of transactions
- use of pre- numbers documents
- matching with independently produced transaction documents
- procedure for investigating errors
- edit checks
- reasonableness checks
10
Q
data processing controls
A
- agreement of control accounts and correction of differences
- preparation of trial balance and periodic management controls
11
Q
Control over assets - custody controls
A
- restricting access to authorised personnel
- adequate protection and insurance
- authorisation of movements and transfers of assets
- counts and inspections when assets leave the client
- clear allocations of responsibility
- segregation of duties between these holding assets
- periodic or continuous counts
- independent reconciliation of book records
