Chapter 10 - Internal Controls COSO

1 integrity and ethical values 2 commitment to

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1. Integrity and ethical values 2. Commitment to competence 3. Corporate governance 4. Management philosophy and operating style 5. Organizational structure (incl. assignment of responsibility and authority) 6. Human resource policies and practices
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+ Control Environment... continued n Management example (attitude) n Moral guidance (rules, code of conduct) n Incentive structure (fair compensation, punishment, expectations, pressure to meet goals) n Address deviations n Hiring n Training n Rewarding good work n Integrity & Ethical Values n Commitment to Competence
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+ Control Environment... continued n Board of directors n Audit committee n Owner oversight n Attitudes toward accounting and internal controls n Attitudes towards risk n Attitudes towards ethics and laws n Corporate Governance n Management Philosophy / Style
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+ Control Environment... continued n Automation n Assignment of responsibility/authorit y n Facilitation of communication/actio n n Employee knowledge of entity’s objectives n Hiring/training/firing n Outside problems – unions n Compensation/promo tion/rotation n Organizational Structure n HR Policies & Practices
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+ Internal Controls – 5 Components COSO Framework
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+ Information and Communication Systems n Surrounding the company activities are the information and communication systems (including accounting system). These enable the entity’s people to capture and exchange the information needed to conduct, manage, and control its operations.
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