New Stuff For Gb112 Final

Front 1

Internal control system Objectives

Back 1

1. Safeguard assets
2. Encourage employees to follow company policy
3. Promote efficiency
4. Ensure accurate, reliable accounting records
5. Comply with legal requirements

Front 2

Internal control system Components

Back 2

1. Control environment – set a good example for employees
2. Risk Assessment – assess risks, don’t alter to make yourself better
3. Control procedures – procedures designed to make sure the businesses’’ goals are achieved
4. Monitoring of controls – auditors are hired, internal auditors monitor assets
5. Information systems – business needs an accurate system in order to properly keep track of assets, expenses, and incomes/losses

Front 3

Internal Control Strenghts

Back 3

1) Peachtree automatically numbers every invoice that is recorded
2) When the business is recording a purchase order, the Peachtree System does not allow a customer to exceed their credit limit.

Front 4

Internal Control Weaknesses

Back 4

1. Peachtree allows a user to change quantities within the company’s inventory database
2. Peachtree software does not number Purchase Orders

Front 5

AIS

Back 5

Special purpose information system, that collects and processes economic events and then reports information relevant to financial statements

Front 6

Data ≠ Information

Back 6

- Data – facts or pieces of information that are used to provide information
- Information – taking that data one step further (compare statistics, rank s)

Front 7

Major provisions of the Sarbanes-Oxley Act.

Back 7

o Changed supervision of CPAs from AICPA to PCAOB - 103
o Auditing firms cannot provide non-auditing services – keep independent - 201
o Audit partners must rotate clients every 5 years
o 404b - requires management to assess and report on Internal Controls
- requires auditing firm to audit IC and FS
o CEO and CFO must sign financial statements, comply with GAAP - 302

Front 8

External Auditors

Back 8

- Give their opinion of the financial statements
- Complete audit according to GAAS (generally accepted auditing standards)
- Report on the income statement, validity, accuracy
- Give an overall opinion of the company

Front 9

Management

Back 9

- Responsible for preparing the financial statements according to GAAP
- Assess Internal Controls and Financial Statements