Chapter+7notes_11-2 - Chapter 7 notes Extra Notes Internal...

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Chapter 7 notes Extra Notes Internal Control and Cash Internal Control o Safeguard Assets o Enhance the accuracy and reliability of accounting records Principles of Internal Control o Establishment of Responsibility o One person responsible o Segregation of duties o Assign related activities to different people o Recordkeeping Separate from Physical Custody o One employee maintains records and one employee maintains custody of asset o Documentation Procedures o Pre-number and reconcile o Physical, Mechanical and Electronic Controls o Essential o Access Controls o Passwords o Monitors o Alarms o Locks o Safes o Time Clocks o Independent internal verification o Internal audit o Periodic inspection or surprise inspection – by independent party, discrepancies reported o Reconciliations authorized by someone other than preparer o Other controls o Bonding employees Obtain insurance protection against misappropriation of assets Insurance company screens individuals and will aggressively
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Chapter+7notes_11-2 - Chapter 7 notes Extra Notes Internal...

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