Chapter 6- powerpoint-class

Chapter 6- powerpoint-class - 6 CHAPTER Reporting and...

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Reporting and Analyzing Cash and Internal Controls C H A P T E R 6
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Purpose of Internal Control Policies and procedures managers use to: Policies and procedures managers use to: 1. 1. Protect assets. Protect assets. 1. 1. Ensure reliable accounting. Ensure reliable accounting. 1. 1. Promote efficient operations. Promote efficient operations. 1. 1. Urge adherence to company policies. Urge adherence to company policies.
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Principles of Internal Control 1. 1. Establish responsibilities. Establish responsibilities. 1. 1. Maintain adequate records. Maintain adequate records. 1. 1. Insure assets and bond key employees. Insure assets and bond key employees. 1. 1. Separate recordkeeping from custody Separate recordkeeping from custody of assets. of assets. 1. 1. Divide responsibility for related transactions. Divide responsibility for related transactions. 1. 1. Apply technological controls. Apply technological controls. 1. 1. Perform regular and independent reviews. Perform regular and independent reviews.
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Technology and Internal Control Reduced Processing Errors More Extensive Testing of Records Limited Evidence of Processing Crucial Separation of Duties Increased e-commerce
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Limitations of Internal Control Human Error Negligence Fatigue Misjudgment Confusion Human Fraud Intent to defeat internal controls for personal gain
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Limitations of Internal Control The costs of internal controls must not exceed their benefits. Costs Benefits
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Control of Cash An effective system of internal control that protects cash and cash equivalents should meet three basic guidelines: Handling cash is separated from recordkeeping of cash.
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Chapter 6- powerpoint-class - 6 CHAPTER Reporting and...

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