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10 Cards in this Set
- Front
- Back
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Why do we need corporate governance
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to overcome agency problem
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Who has marjor control over mgmt?
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External auditors
Internal auditors Credit rating agency SEC IRS attorneys Internal control system security analyst creditors |
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Objective of Internal control
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1. Financial information reliability
2. Operating efficiency and effectiveness 3. compliance with law |
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Components of Internal Control (5)
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1. control environment
2. assessment of risk 3. control activities 4. information and communication 4. monitoring |
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Limitations of internal control
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1. Mgmt can override
2. segeration can be circumvented by collusion 3. can breakdown due to bad judgement 4. can can not excced benefit |
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What does Enterprise Risk Mgmt do?
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A process designed to identify potential events that may affect the organization and manage risk to be within it's risk appetite and provide resonable assurance regarding achieving objectives
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What is Risk Appetite
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the amount of risk an organization will accpet to acheive it's objectives
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What are the 8 componentes of Risk Mgmt
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1. Control environment
2. Objective setting 3. Risk identification 4. Risk assessment 5. Risk respone 6. Control activities 7. Information and communication 8. Monitoring |
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Evaluator
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Individual that monitors internal control within an organization
Must be competent and objective |
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Inherent Risk
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Risk to the organization if managment does nothing to alter it's likelihood or impact
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