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L7 Notes_Part_7 - Behavioral Aspects of Control What are...

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Control Activities: 4. Segregation of Duties Separation of duties between incompatible functions With technology Behavioral aspects of control ARCO authorization, recordkeeping, custody of assets, and operations within an organizational structure A. custody - accounting i. ex: cash receipts - cashier takes cash, doesn't record sale or credit customer account B. authorization - custody i. ex: take cash of customer, write-off account ii. ex: authorize payment to a vendor (friend), then pay bill C. operating accounting -> self scoring i. ex: over reporting the performance of your operations D. accounting - authorization i. ex: write-off A/R account of a friend; authorize sale to deadbeat then erase A/R from Ledger E. recordkeeping and posting A/R subsidiary ledger to General Ledger
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Unformatted text preview: Behavioral Aspects of Control What are the behavioral and economic considerations in designing an internal control structure? What explanation could you give an employee who feels that the redundant double checking of his or her work is inefficient and impugns his or her integrity and competence? Consider a church in which an appointed member is given complete reign over finances (accounting and treasury function). This volunteer had devoted considerable time and money to the cause. All members of the church are volunteers who are actively dedicated to its mission. Should the controls surrounding the treasurer function be a strong as those in a corporate environment? Fire that hardens the egg, melts the butter...
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L7 Notes_Part_7 - Behavioral Aspects of Control What are...

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