Accounting Units 9&10 Internal Controls

Front 1

What do the internal control policies and procedures within an organization help achieve?

Back 1

Optimize resources, prevent&detect errors and irregularities, safeguards its assets, and maintain the accuracy and reliability of its accounting records

Front 2

What are the 6 principles of internal control?

Back 2

Authorization of transactions and activities, segregation of duties, documentation procedures, safeguards to control access to and use of assets and records, external verification and internal verification

Front 3

Define Authorization of Transactions

Back 3

Authorization by the proper individuals is important, control is most effective when only one person is responsible for a given task

Front 4

Define Segregation of Duties

Back 4

The work of one employee should provide a reliable basis for evaluating the work of another employee

Front 5

Define Documentation procedures

Back 5

Documents should provide evidence that transactions and events have occurred

Front 6

Define Safeguards to control access to and use of assets and records

Back 6

Physical, mechanical and electronic controls relate primarily to the safeguarding of assets and enhancing accuracy and reliability of accounting records

Front 7

External verification

Back 7

Indicates whether the company's financial statements fairly present its financial position and results of operations in accordance with gaap

Front 8

Define internal verification

Back 8

Involves review comparison and Reconciliation of information from two sources

Front 9

Define bonding

Back 9

Bonding involves obtaining Insurance protection against misappropriation of assets by dishonest employees

Front 10

What does the accountant considered as cash

Back 10

Coins,currency ( paper or virtual money) cheques,money orders, Travelers cheques, and money on deposit in the bank or similar depository

Front 11

Define establishment of responsibilities for cash receipts

Back 11

Only designated Personnel are authorized to handle cash receipts

Front 12

Define physical mechanical and electronic controls for cash receipts

Back 12

Store Cash in safes and Bank vaults limit access to storage areas and use cash registers

Front 13

Define segregation of Duties over cash receipts

Back 13

Different individuals receive Cash, record cash receipts and hold cash

Front 14

Define independent verification for cash receipts

Back 14

Supervisors count cash receipts daily, comptroller compares total receipts to bank deposits daily

Front 15

Define document procedures for cash receipts

Back 15

Use mail receipts, cash register tapes and deposit slips

Front 16

Define other controls for cash receipts

Back 16

Bond personnel who handles cash, require employees to take vacation, deposit all cash in bank daily

Front 17

Define establishment of responsibility for cash disbursements

Back 17

Only designated Personnel are authorized to sign checks

Front 18

Define segregation of Duties 4 cash disbursements

Back 18

Different individuals approve and make payments, cheque signers do not record cash disbursements

Front 19

Define document procedures for cash disbursements

Back 19

Use pre number checks and account for them in sequence, each check must have approved invoice

Front 20

Define physical mechanical and electronic controls for cash disbursements

Back 20

Store blank checks in safe with limited access, print checks amount by machine in indelible ink

Front 21

Define independent verification for cash disbursements

Back 21

Compare checks to invoices, reconcile bank statements monthly

Front 22

Define other controls for cash disbursements

Back 22

Stamp invoices paid

Front 23

Define debit memoranda

Back 23

Charges against depositors account

Front 24

Define credit memoranda

Back 24

Amounts that increase depositors account

Front 25

Define deposits in transit

Back 25

Deposit recorded by depositor that have not been recorded by the bank

Front 26

Define outstanding checks

Back 26

Checks written and recorded by company that have not been presented to or paid by the bank

Front 27

Define Bank service charge

Back 27

A fee charged by the bank for the use of its services

Front 28

Define NSF check

Back 28

Non sufficient funds bounced check

Front 29

What are limitations on internal controls

Back 29

Cost benefit, Collision, size of business, human element