08 - Presentation Deck - ACC 211: PRINCIPLES OF ACCOUNTING...

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ACC 211: PRINCIPLES OF ACCOUNTING PRESENTATION DECK Prepared by: Jill Mitchell, Assistant Professor, NOVA Reference: Weygandt, Jerry, Kieso, and Kimmel. Accounting Principles Unless noted, illustrations are from the referenced text.
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Chapter 8-2 1.1 Define internal control 1.2 Identify the principals of internal control 1.2 Understand the limitations of internal control Course Competencies 2. Cash Controls 1. Internal Control & Cash 3. Use of a Bank 2.1 Explain the application of internal control principles to cash receipts and cash disbursements 3.1 Indicate the control features of a bank account 3.2 Be able to identify the three parties to a check 3.3 Prepare a bank reconciliation
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Chapter 8-3 Fraud and Internal Control Fraud: Dishonest act by an employee that results in personal benefit to the employee at a cost to the employer. Why does fraud occur? The Fraud Triangle
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Chapter 8-4 Internal Control The Sarbanes-Oxley Act of 2002 (SOX) Requires companies to: Develop principles over financial reporting Continually verify that controls are working Independent outside auditors (CPA firms) are required to attest to the level of internal control SOX created the Public Company Accounting Oversight Board (PCAOB) 1.1 Define internal control.
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Chapter 8-5 Under the Sarbanes-Oxley Act, all publicly traded U.S. corporations are required to maintain an adequate system of internal control. Internal Control Internal control consists of all of the related methods and measures adopted within an organization to: 1. Safeguard its assets from employee theft, robbery and unauthorized use. 2. Enhance the accuracy and reliability of its accounting records by reducing the risk of: a. errors (unintentional mistakes) b. irregularities (intentional mistakes and misrepresentations 3. Increase efficiency of operations, and 4. Ensure compliance with laws and regulations. 1.1 Define internal control.
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Chapter 8-6 Internal Control Systems Internal control systems have five primary components 1. C ontrol activities – management must design policies and procedures to address specific risks faced by the company 2. R isk assessment – companies must identify and analyze the various factors that create risk for the business and determine how to manage those risks 3. I nformation and communication – the system must capture and communicate all pertinent information both down and up the organization, as well as communicate information to appropriate external parties 4. M onitoring – systems must be monitored for their adequacy; significant deficiencies must be reported to top management and board of directors 5. A control E nvironment – top management is responsible to make it clear that the organization values integrity and that unethical behavior will not be tolerated; known as “tone at the top”
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Chapter 8-7 Internal Control – Principles of Internal Control
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This note was uploaded on 02/28/2011 for the course ACC 211 taught by Professor Mitchell during the Spring '11 term at Northern Virginia Community College.

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08 - Presentation Deck - ACC 211: PRINCIPLES OF ACCOUNTING...

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