Module 3 Internal Control Systems Flashcards
What is the purpose of a system of internal control?
To provide directors with reasonable assurance over:
- The reliability of financial reporting
- The effectiveness and efficiency of operations
- Compliance with applicable laws and regulations
What are the five components of internal control?
- Control activities
- Risk assessment process
- Information Systems
- Monitoring of controls
- control Environment
What is accounting information systems?
Structures used by organisations to collect, store and process financial and accounting data
What are the 5 categories of control activities? APIPS
- Authorisation control
- Performance Review
- Information processing controls
- Physical controls
- Segregation of duties
What are the six commonly used IT application controls
- Audit Log
- Batch controls
- Programmed Editing
- Calculation
- Check digits
- Exception reports
What are the limitations of internal control systems? RC CHUM
- Relevancy/Obsolescence
- Cost
- Collusion
- Human error
- Unusual/infrequent transactions
- Management override
What are the four commonly covered areas by IT General Controls? APOC
- Access to programs and data
- Program changes and development
- Computer operations
- Continuity of operations
Program changes and development, what needs to be considered? DATA
- Authorisation
- Development
- Testing
- Approval
What are the stages of system development life cycle
- Business analysis
- Feasibility study
- Systems analysis
- Design
- Development
- Testing
- Implementation
- Maintenance
- Post implementation review
- Enhancements/Wish list
Business process
A series of activities that enable a company to meet one or more of its objectives. Cover every conversion of business transactions, financial to non financial
Business risk
The threat that an action or event will adversely affect the organisation’s ability to achieve its objectives.
