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28 Cards in this Set
- Front
- Back
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What part of speech are the processes in Data Flow Diagrams?
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verbs
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What part of speech are the data store and entity labels?
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nouns
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What do DFDs focus on?
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data and how it moves between elements
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What do Flowcharts focus on?
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data, documents, and processing tools
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Are lines labeled in DFDs or flowcharts?
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DFDs
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What is an Entity Relationship Diagram?
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documentation technique to represent the relationship between entities
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What are the three common elements of internal control?
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managing the risks of the firm
internal control is a process designed to provide reasonable assurance |
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Who are the 5 organizations the formed the Committee of Sponsoring Organizations of the Treadway Commission?
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AICPA
american accounting association institute of internal auditors IMA financial executives institute |
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What are the 4 internal control objectives according to AICPA SAS?
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safeguard assets of the firm
ensure accuracy and reliability of accounting records and information promote efficiency of the firm's operations measure compliance with management's prescribed policies and procedures |
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What are the 3 modifying assumptions to the internal control objectives?
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management responsibility
reasonable assurance methods of data processing |
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What are the 4 limitations of internal controls?
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possibility of honest errors
circumvention via collusion management override changing conditions--especially in companies with high growth |
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What are the 4 exposures of weak internal controls?
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destruction of an asset
theft of an asset corruption of information disruption of the information system |
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What are the 3 controls to protect from exposures?
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preventive, detective, corrective
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The weaker the internal control structure, the ______ the assessed level of risk. The higher the risk, the ____ auditor procedures applied in the audit.
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higher, more
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What are the 5 internal control components from SAS109/COSO?
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control environment
risk assessment information and communication monitoring control activities |
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Some examples of control environment:
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integrity and ethics
organizational structure delegation of responsibilities performance evaluation measures regulatory agencies HR policies and practices |
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What are the 6 types of physical controls?
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transaction authorization
segregation of duties supervision accounting records access control independent verification |
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segregate the 3 basic functions of event processing
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authorizing events
recording events safeguarding resources |
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a compensation for lack of segregation. may be built into computer systems
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supervision
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evidence that only legit and authorized transactions occurred. provide audit trail. proper backup
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accounting records
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restrict physical access to assets
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access controls
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procedures that check up on individuals and the transaction processing system (reconciliation, performance reviews)
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independent verification
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What kind of physical control is missing? Purchases are not authorized by inventory control.
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transaction authorization
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What kind of physical control is missing? Inventory records are updated based on the purchase order rather than the Receiving Report or Invoice.
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accounting records
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What kind of physical control is missing? The Accounts Payable Subsidiary ledger is updated based only on the Invoice. There is no reconciliation with supporting documents (purchase order and receiving report).
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accounting records
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What kind of physical control is missing? There is no Cash Disbursements Journal or Check Register in use.
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accounting records
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What kind of physical control is missing? The receiving department prepares the Receiving Report directly from the Packing Slip. A blind copy of the Purchase Order should go to the receiving clerk to control this activity. A supervisor should take possession of the packing slip that contains relevant data and oversee the inspection process.
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accounting records/segregation of functions
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What kind of physical control is missing? The General Ledger department should receive Journal vouchers or batch totals from Inventory Control, Cash Disbursements, and Accounts Payable. These are used to keep the General Ledger Control accounts current and to verify the overall accounting accuracy of the process.
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accounting records/independent verification
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