Warren_23e__AISE_IM_Ch08 - chapter 8 Sarbanes-Oxley...

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chapter 8 Sarbanes-Oxley, Internal Control, and Cash ______________________________________________ OPENING COMMENTS In recent years, things have occurred that have resulted in increased emphasis on proper financial reporting and on ensuring controls are in place to accomplish this. Chapter 8 introduces background on the Sarbanes-Oxley Act of 2002, which has significantly increased the outside demand for assuring proper financial reporting. The chapter also addresses the development of internal control frameworks for a business and the financial accounting practices relating to recording cash transactions. Cash is highlighted in this chapter because it is the asset most vulnerable to manipulation. After studying the chapter, your students should be able to: 1. Describe the Sarbanes-Oxley Act of 2002 and its impact on internal controls and financial reporting. 2. Describe and illustrate the objectives and elements of internal control. 3. Describe and illustrate the application of internal controls to cash. 4. Describe the nature of a bank account and its use in controlling cash. 5. Describe and illustrate the use of a bank reconciliation in controlling cash. 6. Describe the accounting for special-purpose cash funds. 7. Describe and illustrate the reporting of cash and cash equivalents in the financial statements. STUDENT FAQS Where do I go to get more information about working with Sarbanes-Oxley when I graduate? I also need to make sure I take the correct courses in college. When a person doesn’t work all the hours they are supposed to during the day, are they defrauding the company? 117 This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher.
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118 Chapter 8 Sarbanes-Oxley, Internal Control, and Cash This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. Why must I learn to balance the cash account when I put the money in the bank for them to protect? Do I have a legal obligation to give cash back to someone when I have no idea who that person is? Why do we spend so much time on internal control for cash receipts and disbursements? Shouldn’t we be just as concerned over other assets? Expenses? Revenue? Liabilities? Why don’t we make journal entries for bank errors? Why do we worry about deposits in transit and outstanding checks? Won’t they “work themselves out” the following month? Why do we need a new asset account called petty cash? Can’t we use the cash account? If we use the account petty cash when we establish a petty cash fund, why don’t we use petty cash
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Warren_23e__AISE_IM_Ch08 - chapter 8 Sarbanes-Oxley...

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