Test 3 Flashcards
Internal Control system goals
effectiveness and efficiency of operations
reliability of financial reporting
compliance with applicable laws and regulations
ethical awareness of all company personnel
Components of internal controls
risk assessment, control activities, information and communication, monitoring
risk assessment
focuses on IDing, analyzing, and managing strategic and internal business process risks
Information and cummunication
focuses on capturing and reporting business activities
Control Activities
help to achieve org. goals related to business processes
Sales business process
sales, shipping, billing, collection
Monitoring
helps track and improve internal controls
effective cash management requires
understanding of future cash flows
Ways cash management can increase net income
keeping inventory levels low
delaying payment to suppliers
speeding up collection from customers
earning greatest return on excess cash
Control of cash receipts
use of sales slips
use of cash register
separation of duties between the handling and recording of cash receipts
daily bank deposits
cash receipt bank account
timely bank reconciliations
Cash receipts
go from customers to org.
Cash disbursements
go from org. to employees and suppliers
control of cash disbursements
proper authorization
use of pre number checks
separation of duties between the handling and recording of cash disbrsements
cash dib./ imprest back accounds
timely bank reconciliations
Bank reconciliations
timing of when business org. and bank record activity
delayed recording by bank
deposits in transit, outstanding checks
