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19 Cards in this Set
- Front
- Back
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Securities & Exchange Committee (SEC) |
Watchdog for investing communities, they are the committee that is tasked with approving changes to GAAP. |
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Internal Controls |
A comprehensive system that helps an organization do the following: Safe guard assets Operate Efficiently and Effectively Ensure Proper Reporting of Financial Information Ensure Compliance with applicable laws and regs Management is responsible |
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Control Envionment |
The foundation for all other components of internal control Leadership, Ethics, Structure |
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Risk Assessment |
Companies have to analyze and determine where the risks are located and take steps to mitigate them. |
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Control Activities |
Policies & Procedures that a company uses to complete internal controls (Training, separation, vacations, security measures, documentation) |
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Limitations of Internal Controls |
Size Collusion |
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Collusion |
2 or more employees create scheme to get around company values |
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Fraud |
The use of deception or trickery for personal gain. |
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Fraud Triangle |
Perceived Opportunity Perceived Pressure Rationalization |
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Management Fraud |
Typically involves fraudulent financial reporting, often times involves management trying to make company look better than what it really is |
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Employee Fraud |
Fraud against a company by employee Stealing cash, check tampering, cash schemes,etc |
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Certified Public Accountant |
Person who has had extensive training and education in business and accounting |
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Audits |
Companies required to hire external CPAs to overview financial documents |
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Audit Opionions |
Unqualified (clean) = Good Standing Qualified (exception) = good standing except for a particular area Adverse Opinion = this statement does not report position fairly Disclaimer = not enough information to report opinion |
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Adverse Opinion |
This statement does not report position fairly |
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Disclaimer |
Not enough information to report opinion |
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Sarbanes Oxley Act |
Law passed in 2002 by Congress requiring a business's management to accept responsibility for providing information needed by stakeholders and also made EXTERNAL AUDITS required to report to committee. |
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Book Value of Stockholders' Equity |
Assets - Liabilities = Equity |
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Market Value or Market Capitalization |
Price Per Share * # of Shares = Market Value |
