36 - Bonds on employees who handle cash Mandatory vacations...

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Internal Control - Objectives Safeguard assets Encourage employees to follow company policy Promote operational efficiency Ensure accurate, reliable accounting records Comply with legal requirements Sarbanes-Oxley Act (SOX) Accounting scandals shook the public’s confidence in the accounting profession Enron and WorldCom overstated profits Auditors Arthur Anderson went out of business In response, Congress passed SOX Established new provisions for how large corporations are audited Internal Control Procedures Competent, reliable and ethical employees Staff should be trained and fairly rewarded for its work Assignment of Responsibilities Job descriptions should be clear Separation of Duties Operations from accounting Custody of assets from accounting Internal Control Procedures Audits Internal or External Documents Electronic Devices Other controls Fireproof vaults for important documents
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Unformatted text preview: Bonds on employees who handle cash Mandatory vacations and job rotation Internal Controls for E-Commerce Risks of online business Stolen credit cards Computer viruses Phishing Security measures Encryption Firewalls Limitations of Internal Control Collusion Two people working together can circumvent system Cost Company must weigh the benefits of controls with the cost Bank Account as Control Keeping cash in a bank account safeguards the asset Bank account documents provide controls Signature card Deposit tickets Checks Bank Statements Electronic Funds Transfer (EFT) Bank Reconciliation Process to update cash account Book Balance Cash account in General Ledger Bank Balance Cash amount according to bank statement Amounts dont equal due to time lags in recording transactions...
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36 - Bonds on employees who handle cash Mandatory vacations...

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