Chpt_07 - Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct...

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Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Control and Accounting  Information Systems 7 UAA – ACCT 316                         Accounting  Information Systems Dr. Fred Barbee Chapter
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Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Introduction to Internal Control
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    Acct 316 Acct 316 Internal Control . . . Can an information system operate without  internal controls? Perhaps. Will the organization attain its objectives? Perhaps.
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Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Why Internal Control?
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    Acct 316 Acct 316 Why Controls . . .  To Ensure system goals are achieved To Lessen the risk of unwanted outcomes
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    Acct 316 Acct 316 Controls . . .  What are the goals that internal control is designed to achieve? What are the typical business risks that the organization should try to avoid?
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Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 What are the goals that internal control is designed to help achieve? Question
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    Acct 316 Acct 316 Internal Control Goals The National Commission on Fraudulent Financial Reporting Appointed The Committee of Sponsoring Organizations (COSO) To study internal control
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    Acct 316 Acct 316 Internal Control Goals COSO entity objectives . . . Operations  - relating to effective and efficient use  of an entity’s resources. Financial Reporting  - relating to preparation of  reliable financial reports. Compliance  - relating to the entity’s compliance  with applicable laws and regulations.
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Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 What are the typical business risks that an organization should try to avoid? Question
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    Acct 316 Acct 316 What is Risk? The dictionary defines risk as . . . What is an exposure? Hazard; peril; exposure to loss or injury.
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Exposure . . .  . . . the potential financial effect of an event  multiplied by its probability of occurrence. Potential Financial Effect of an Event Probability of Occurrence Exposure
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Risk Analysis THREAT EXPOSURE RISK EXPECTED LOSS * * =
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Risk Analysis THREAT EXPOSURE RISK EXPECTED LOSS * * = Internal Controls
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Controls . . .  An exposure consists of the potential financial effect  of an event multiplied by its probability of  occurrence. $5,000,000 X 5% = $250,000 Potential Financial Effect of an Event Probability of Occurrence Exposure
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Direct Material Variances An example of a control system in accounting AQ X AP Rate  Variance AQ X SP SQ X SP Quantity  Variance
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Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Common Business Exposures
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Common Business Exposures Erroneous Record Keeping Unacceptable Accounting Business Interruptions Erroneous Management Decisions Business Exposures
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Common Business Exposures Fraud and Embezzlement Statutory Sanctions Excessive Costs Loss/Destruction Of Resources Competitive Disadvantage Business Exposures
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Acct 316 Acct 316 Acct 316
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Chpt_07 - Acct 316 Acct 316 Acct 316 Acct 316 Acct 316 Acct...

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