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P7-26A - Problems(Group A P7-25A(L OBJ 1 2 3 4 Internal...

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Unformatted text preview: Problems (Group A) P7-25A (L. OBJ 1, 2, 3, 4) Internal control, components, procedures and TERMS: I») 'JI ween? 1i]. i]. 12. 13. Internal control Control procedures Firewalls Encryption Control environment Information system Separation of duties Monitoring of controls Documents Audits Operational efficiency Risk assessment Sarhanes-Oxley Act laws [20—25 min] DEFINITIONS: Ionnpoe> .— K. L. . What internal and external auditors do Part of internal control that ensures resources are not wasted Law that requires testing internal control systems Provides the details of business transactions Limits access to a local network Control procedure that divides responsibility between two or more” people Identification and evaluation of threats to the business . May be internal! and external Component of internal control that helps ensme decision makers receive accurate data The organizational plan and all the related measures that safeguard assets, encourage employees to follow company policy1 promote operational efficiency. and insure accurate reliable accounting data Component of internal control that helps ensure business goals are achieved Rearranges data by a mathematical process M. The “tone at the top“ Requirement 1. Match the terms with their definitions. [10—20 min] Each of the following situations has an internal control weakness. 3. Rite-Way Applications sells accounting software. Recentiy1 development of a new program stopped while the programmers redesigned Rite—Way‘s accounting sys- tem. Rite'Way'saccountants could have performed this task. I). Betty (Stable has been your trusted employee for 30 years. She performs all cash- handling and accounting duties. Ms. Grable just purchased a new Lexus and a new home in an expensive suburb. As owner ofrhe company, you wonder how she can afford these luxuries because you pay her only $35,000 a year and she has no source of outside inL‘orne. c. Sanchez Hardwoods, a private company1 falsified sales and inventory figures in order to get an important loan. The loan went through, but Sanchez later went bankrupt and could not repay the bank. d. The office supply company where Champs Sporting Goods purchases sales receipts recently notified Champs that its documents were not prenumhered. Alex Champ, the owner, replied that he never uses receipt numbers. e. Discount stores such as Tallon make most of their sales for cash, with the remainder in credit-card sales. To reduce expenses, one store manager ceases pur- chasing fidelity bonds on the cashiers. f. Bob‘s Burger House keeps all cash received from sales in a safe because Bob thinks banks are not “safe." P7-26A (L. OBJ. 3, 5, 7, 8) Correcting internal control weakness ,2 Aid \r K. L: v ...
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