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10 Cards in this Set

  • Front
  • Back
Define Internal Control-
The procedures and processes used by a company to safeguard its assets, process information accurately, and ensure compliance with laws and regulations.
Elements of Internal Control-
1. The control environment
2. Risk assessment
3. Control procedures
4. Monitoring
5. Information and communication
(Elements of Internal Control)
Control Environment-
-Overal attitude of management and employees about the importance of controls.
-Management's Philosophy and Operating Style, Organizational Structure, Personnel Policies.
(Elements of Internal Control)
Risk Assessment-
-All organizations face risks
-Ex.: Changes in customer requirements, competitive threats, regulatory changes, changes in economic factors such as interest rates, and employee violations of company policies and procedures.
(Elements of Internal Control)
Control Procedures-
-Established to provide reasonable assurance that business goals will be achieved, including the prevention of fraud.
(Elements of Internal Control)
-__________ the internal control system locates weaknesses and improves control effectiveness.
(Elements of Internal Control)
Information and Communication-
-Information about the control environment, risk assessment, control procedures, and monitoring is needed by management to guide operations and ensure compliance with reporting, legal, and regulatory requirements.
Define Bank Reconciliation-
The analysis of the items and amounts that cause the cash balance reported in the bank statement to differ from the balance of the cash account in the ledger in order to determine the adjusted cash balance.
Bank Reconciliation:
-Divided into two sections: Bank section and Company section.
-Both sections begin with the cash balance according to that sections statement and ends with the adjusted balance.
-The adjusted balance for both sections should be equal.
Define Petty Cash Fund-
A special-purpose cash fund to pay relatively small amounts.