Sec E Flashcards
(15 cards)
What is the objective of authorization in transaction controls?
All transactions are approved by someone with the authority to approve the specific transactions.
Define completeness in the context of transaction controls.
All valid transactions are included in the accounting records.
What does accuracy refer to in transaction controls?
All valid transactions are accurate, consistent with the originating transaction data, correctly classified, and recorded in a timely manner.
What is meant by validity in transaction controls?
All recorded transactions fairly represent the economic events that occurred, are lawful, and executed in accordance with management’s authorization.
What are physical safeguards and security in transaction controls?
Access to physical assets and information systems are controlled and restricted to authorized personnel.
Explain the error handling objective in transaction controls.
Errors detected at any point in processing are promptly corrected and reported to the appropriate level of management.
What does segregation of duties aim to achieve in transaction controls?
Duties are assigned to ensure that no one person is in a position to both perpetrate and conceal an irregularity.
What is the role of authorization and approvals in transaction control activities?
Authorization confirms that the transaction is valid; it is often an approval by a higher level of management or through verification methods.
Define verifications in the context of transaction control activities.
Items are compared with one another or with a policy; if they do not match, follow-up occurs.
What are physical controls in transaction control activities?
Securing equipment, inventories, and cash in locked areas with access restricted to authorized personnel.
What are controls over standing data?
Controls ensure the accuracy, completeness, and validity of standing data used in processing transactions.
What is the purpose of reconciliations in transaction controls?
To compare two or more data elements and take action if differences are found.
True or False: Reconciliations only address the accuracy of processing transactions.
False
What do supervisory controls evaluate in transaction control activities?
Whether other transaction control activities are performed completely, accurately, and according to policy and procedures.
Fill in the blank: _______ compares the balance in the bank account according to internal records with the balance in the account according to the bank.
Bank reconciliation
