S09-Control - INTERNAL CONTROL SECTION 9 Internal Control:...

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INTERNAL CONTROL SECTION 9
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Internal Control: Principles and Concepts The client’s system of internal is an important factor in an audit engagement The study of internal control often represents a significant part of field work We will examine: 1. Basic considerations 2. Meeting the second standard of GAAS
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ST. CATHARINES: Former stock broker Stan Magda has been jailed for contempt of court for refusing to say what happened to the $2 million his wife stole from the St. Catharines Standard. Ontario Superior Court Justice Linda Walters sentenced the 59-year-old self described house husband to five says in jail yesterday and gave him until Sep. 7 to account for the money his wife stole from her employer. Lucy Magda, 62, was sentenced to 34 months in penitentiary last July for embezzling $2.2 million over a five-year period while she was running the classified ad department at The Standard. She is now living in a half- way house in Dundas. Once considered a trusted employee, she stuffed up to $6,000 a day in her handbag and covered her tracks by destroying or doctoring the paper trail. She was caught and immediately fired in the spring of 1997 after a temporary employee she had berated discovered discrepancies in the books. She and her husband, who was no longer working, were both charged with theft related charges in1997. But the charges against Stan were dropped in January 2004, after she pleaded guilty to theft over $5,000. The St. Catharines Standard had earlier won a $2.3 million civil judgment that held the couple jointly responsible for the missing funds. The case has dragged on in the courts for almost eight years with lawyers for the paper pressing the pair to account for the money. During the theft investigation, Niagara police found what s detective described as an “Aladdin's cave” of stolen booty in the couple’s modest Thorold home. Police tallied about $1,170,000 worth of items, including hundreds of pairs of shoes and rooms full of unworn clothing that still had price tags. They also found about $470,000 in cash stashed in the house and several hundred thousands in numerous bank accounts under aliases. Lucy had never earned more than $48,000 a year. When asked about the money during pre-trial discoveries, Lucy told The Standard’s lawyer Peter Mahoney her late father had won the $470,000 while gambling with his buddies in the 1960’s, according to court documents. She said her father, who died in 1975, told her to keep the money in the house until it was sold. She also claimed her dad had given her money to go shopping.
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What is Internal Control? Remember the second examination standard CICA 5200 Those policies and procedures established and maintained by management that affect control risk relating to specific financial statement assertions at the account balance or class of transaction level Comprises of the entity's control environment and control systems installed by management
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Two subdivision of internal control
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This note was uploaded on 05/08/2011 for the course ACTG 3P11 taught by Professor Ademson during the Winter '10 term at Brock University.

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S09-Control - INTERNAL CONTROL SECTION 9 Internal Control:...

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