Lecture 10 - Agenda Internal Controls & Cash 1. 2. 3....

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1 Professor Tyrone M Carlin May 2009 Agenda 1. What is Internal Control? 2. Why Care About This? 3. What Can Go Wrong? 4. What Can be Done? 5. Focusing on Cash What is Internal Control? What is Internal Control? Internal Control is a process affected by an entity’s board of directors, management and other personnel designed to provide reasonable assurance regarding the achievement of objectives in the following categories; - Effectiveness and efficiency of operations - Reliability of financial reporting - Compliance with applicable laws and regulations Key Threads of Internal Control Resources Directed Monitored Measured The Internal Control System
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2 Control Environment The foundation for all other elements of the internal control system. Provides discipline and structure. Sets the “tone” within the organisation. Includes ethics, commitment to competence, management philosophy Risk Assessment The process of identifying and analysing risks to the achievement of its objectives. Includes formation of a basis for determining how risks should be managed. Control Activities Key policies and procedures implemented in order to provide assurance that management directives are carried out and control objectives are achieved. Information and Communication These systems or processes support identification, capture and exchange of information to facilitate detection and combat of risks + perform objectives. Monitoring Processes Systems & procedures put in place to monitor the control system & assure its effectiveness over time. Why Care About This?
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3 (1) High Prevalence of Staff Fraud Theft of Property U.S Chamber of Commerce estimate – up to 75% of employees steal at least once and up to 40% of employees steal at least twice. Retail
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This note was uploaded on 08/22/2011 for the course FINC 2011 taught by Professor Craigmellare during the Three '10 term at University of Sydney.

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Lecture 10 - Agenda Internal Controls & Cash 1. 2. 3....

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