12_Internal_Controls_Part_1

12_Internal_Controls_Part_1 - Overview Goals of internal...

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1 Internal Controls Part 1 Overview ` Goals of internal control ` Controls ` Risk assessment ` Control activities Internal Control Goals ` Safeguard assets ` Ensure accuracy and reliability of accounting information ` Promote operational efficiency ` Encourage adherence to company policies. Controls ` Preventive controls are those that management puts in place to prevent problems from occurring. ` Detective controls alert us when the preventive controls have failed ` Corrective controls are procedures a company uses to solve or correct a problem. Risk Assessment ` How do you assess risk? ` How does your risk assessment affect behavior? ` How should risk assessment affect your use of controls? ` A good audit trail ` Sound personnel policies and practices ` Separation of duties ` Physical protection of assets ` Internal reviews of controls Control Activities ` Timely performance reports
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2 ` You have been hired by the management of Alden, Inc., to review its control procedures for the purchase, receipt, storage, and issuance of raw materials.You prepared the following comments, which describe Alden’s
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