ch08 - Chapter 8 Internal Control and Cash ISV Financial...

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Chapter 8-1 Chapter Chapter 8 8 Internal Control and Cash ISV Financial Accounting, Sixth Edition
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Chapter 8-2 1. Define internal control. 2. Identify the principles of internal control. 3. Explain the applications of internal control principles to cash receipts. 4. disbursements. 5. Describe the operation of a petty cash fund. 6. Indicate the control features of a bank account. 7. Prepare a bank reconciliation. 8. Explain the reporting of cash. Study Objectives Study Objectives
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Chapter 8-3 Internal control consists of all the related methods and measures adopted within an organization to: 1. Safeguard its assets. 2. Enhance the accuracy and reliability of its accounting records. Reduce risk of: a. Errors (unintentional) b. Irregularities (intentional) Internal Control Internal Control SO 1 Define internal control. SO 1 Define internal control. Under the Sarbanes-Oxley Act, all publicly traded U.S. corporations are required to maintain an adequate system of internal control.
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Chapter 8-4 Companies must develop sound principles of control over financial reporting. continually verify that controls are working. Internal Control Internal Control SO 1 Define internal control. SO 1 Define internal control. The Sarbanes-Oxley Act The Sarbanes-Oxley Act Independent outside auditors must attest to the level of internal control. SOX created the Public Company Accounting Oversight Board (PCAOB) , which now establishes auditing standards and regulates auditor activity.
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Chapter 8-5 Measures vary with size and nature of the business. management’s control philosophy. There are six principles apply to most enterprises: Internal Control Internal Control SO 2 Identify the principles of internal control. SO 2 Principles of Internal Control Principles of Internal Control Illustration 8-1
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Chapter 8-6 ESTABLISHMENT OF RESPONSIBILITY Control is most effective when only one person is responsible for a given task. Internal Control Internal Control SO 2 Identify the principles of internal control. SO 2 Principles of Internal Control Principles of Internal Control SEGREGATION OF DUTIES - Related duties should be assigned to different individuals. - Record keeping separate from physical custody. DOCUMENTATION PROCEDURES Companies should use prenumbered documents and all documents should be accounted for.
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Chapter 8-7 Internal Control Internal Control SO 2 Identify the principles of internal control. SO 2 Principles of Internal Control Principles of Internal Control PHYSICAL, MECHANICAL, AND ELECTRONIC CONTROLS Physical Mechanical and Electronic Illustration 8-3
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Chapter 8-8 Internal Control Internal Control SO 2 Identify the principles of internal control. SO 2 Principles of Internal Control Principles of Internal Control INDEPENDENT INTERNAL VERIFICATION 1.
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ch08 - Chapter 8 Internal Control and Cash ISV Financial...

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