Types and Principles of Accounting Controls Flashcards
Define “preventive controls.”
“Before the fact” controls designed to stop an error or irregularity from occurring.
Define “application controls.”
Controls over specific data input, data processing, and data output activities. Designed to ensure the accuracy, completeness, and validity of transactions processing. As such, application controls have a relatively narrow focus on these accounting applications that are involved with data entry, update, and reporting.
Define “general controls.”
Controls over the environment as a whole. Apply to all functions, not just specific accounting applications. General controls help ensure that data integrity is maintained.
Define “internal control.”
A process effected by the entity’s Board of Directors, Management, and other personnel, that is designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.
Define “feedback controls.”
A procedure in which the results of a process are evaluated, and if the results are undesirable, the process is adjusted to correct the results, most detective controls are also feedback controls.
Define “corrective controls.”
Paired with detective controls, they attempt to reverse the effects of the error or irregularity which has been detected.
Define “detective controls.”
“After the fact” controls designed to detect an error after it has occurred (though preferably before the erroneous information is used to update the database or appears in reports).
Define “feed-forward controls.”
A process in which future results are projected based on current and past information and, if the future results are undesirable, the inputs to the system are changed to avoid the projected outcome.
