Accounting+Ch+4

Accounting+Ch+4 - Chapter Four Internal Controls Banking...

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Chapter Four Internal Controls Banking Activities as Controls Controlling and Managing Cash Ethics and Accounting
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Internal Control Internal Control the organizational plan  and all the related measures that an  entity adopts to: 1. Safeguard assets 2. Encourage adherence to company  policies 3. Promote operational efficiency 4. Ensure accurate and reliable accoutnig  records
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Elements of an IC system: 1. Competent, reliable and ethical personnel 2.  Assignment of responsibilities 3. Proper authorization 4. Supervision of employees 5. Separation of duties 6.  Internal and External Audits 7. Documents and records 8. Electronic and computer controls
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Limitations of IC Colluding- two or more employees working  together to commit fraud Human Element Human error-factor when humans are carrying out  IC policies and procedures (due to negligence,  fatigue, misjudgment, or confusion) Human fraud-intent by people to defeat the IC  system for personal gain (includes collusion) Cost Vs. Benefits  Cost of controls must not exceed benefit
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This note was uploaded on 03/27/2008 for the course ACCT 2000 taught by Professor Holmes during the Spring '08 term at LSU.

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Accounting+Ch+4 - Chapter Four Internal Controls Banking...

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