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29 Cards in this Set
- Front
- Back
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7 Principles of Control Environment
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Philosophy
Human resources Reporting competencies Authority and responsibility Structure Ethical Values Directors |
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Objectives of ERM
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Strategic- High level goals designed to achieve the mission
Operations- Achievement objectives through the effective and efficient use of resources Reporting- Reliable reporting Compliance- Ensuring compliance with laws and regulations |
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Components of ERM
Hint: IS EAR AIM |
Internal environment
Setting objectives Event identification Assessment of risk Risk response Activities (control) Information and communication Monitoring |
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The Internal Control Framework applies to _______; whereas ERM Framework applies to _________.
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Financial Reporting
Entity-wide Management |
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Internal Control Framework: Board of Directors principle attributes
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a. Operates independently
b. Monitors risk c. Appoints audit committee d. Oversees quality and reliability |
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Internal Control Framework: Organizational Structure principle attributes
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a. Management designs appropriate financial reporting structures that proves relevant information at appropriate functional and business unit levels
b. Management maintains an organizational structure that facilitates reporting and other communications regarding internal control over financial reporting |
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Internal Control Framework: Authority and Responsibility principle attributes
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a. Responsibilities are defined as follows:
1) Audit committee oversees the process for defining responsibility for key financial reporting roles 2) Executive management is responsible for solid internal control 3) Management is responsible for ensuring all employees understand their responsibilities and adhere to internal control policies b. Authority is properly limited by position |
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Four components of balanced scorecard
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a. Learning and Growth
b. Customer c. Business process (efficiency and effectiveness d. Financial |
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What do Total Productivity Ratios (TPRs) show?
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Value of all output relative to the value of all input
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Total Productivity is calculated:
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Quantity of output produced / costs of inputs
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Partial Productivity Ratios (PPRs) refluct...
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the value of all outputs as compared to the value of major categories of input
PPRs are only concerned with the quantity of a single input and not its price PPR is calculated as the quantity of of output produced divided by the quantity of the single input used |
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PPR is calculated:
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quantity of output produced / quantity of the single input used
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What is a use of a Pareto Diagram in respect to internal control issues?
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Pareto Diagrams are used to determine the quality control issues that are most frequent and demand the greatest attention
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Five elements of the Marketing Mix
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Product
Market segment Method of Delivery Communication strategy Price |
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Theoretical Cost Drivers:
Executional vs Structural cost drivers |
Executional- short term
Structural- long term |
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Prime cost vs Conversion cost
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Prime cost= DL+DM
Conversion cost= DL+MOH |
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Methods to allocate joint costs of joint products
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1. Allocation by unit volume
2. Relative net realizaable values at split-off point. NRV= sales value less cost of completion and disposal |
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Equivalent Units under FIFO (3 steps)
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Beginning WIP x % to be completed
Units completed - Beg WIP Ending WIP x % completed |
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Equivalent Units under Weighted Average (2 steps)
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Units completed
Ending WIP x % completed |
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Cost per Equivalent unit calculation under FIFO
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FIFO = Current costs only/EU
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Internal Control Framework- Control Environment:
Human Resources- Attributes |
Attributes of the Human Resource Principle:
1. Policies demonstrate commitment to competence and ethics 2. Recruitment is guided by ethical principles 3. Management supports appropriate training 4. Performance evaluations support achievement of financial reporting objectives |
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Internal Control Framework- Control Environment:
Human Resources- Approaches to applying principle |
1. Maintain current job descriptions
2. Maintain current HR procedures 3. Screen applicants though reference checks and resume reviews 4. Establish a review and appraisal process |
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Internal Control Framework- Monitoring:
On going and separate evalutations- Attributes |
1. Internal control effectiveness monitoring should be built into or integrated with the company's operations
2. objective consideration of internal control 3. Management reviews feedback on internal control over financial reporting 4. Scope and frequency of evaluations varies based on significance of risk being controlled |
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Internal Control Framework- Monitoring:
Reporting Deficiences- Attributes |
1. Reports are made to process owners who control and correct process errors
2. Significant deficiencies are communicated to top mangagement and the board or the audit committee 3. Corrective actions are taken on a timely basis |
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How do you allocate the revenues arising from the sale of byproducts under joint product costing?
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The proceeds from the sale of byprpducts is a reduction to common costs for joint product costing
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What are the two ways to allocate revenues arising from the sales of byproducts?
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1. treat as a reduction of joint costs under a joint product costing system; or,
2. credit the proceeds to micellaneous income |
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Costing system:
Operations costing |
Operations costing uses components of both job order costing and process costing
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Costing system:
Back-flush costing |
Back-flush costing accounts for certain costs at the end of the process in circumstances where there is little need for in-process inventory valuation
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Format for the Cost of Goods Manufactured Schedule:
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WIP, Beg.
Add: DM used DL used MOH applied Total manufacturing costs available Less: WIP, end Equals Cost of goods Manufactured |
