Acct 316 Acct 316 Control and Accounting Information
- Slides: 98
Acct 316 Acct 316 Control and Accounting Information Systems Chapter Acct 316 7 UAA – ACCT 316 Accounting Information Systems Dr. Fred Barbee
Acct 316 Acct 316 Acct 316 Introduction to Internal Control
Internal Control. . . Can an information system operate without internal controls? Acct 316 Perhaps. Will the organization attain its objectives? Perhaps.
Acct 316 Acct 316 Why Internal Control? Acct 316
Why Controls. . . To Ensure system goals are achieved Acct 316 To Lessen the risk of unwanted outcomes
Controls. . . Acct 316 What are the goals that internal control is designed achieve? What are the typical business risks that the organization should try to avoid? to
Acct 316 Acct 316 Acct 316 What are the goals that internal control is designed to help achieve? Question
Internal Control Goals n The National Commission on Fraudulent Financial Reporting Acct 316 Appointed n The Committee of Sponsoring Organizations (COSO) n To study internal control
Internal Control Goals n COSO entity objectives. . . Œ Operations Acct 316 - 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.
Acct 316 Acct 316 Acct 316 What are the typical business risks that an organization should try to avoid? Question
What is Risk? n. The dictionary defines risk as. . . Acct 316 Hazard; peril; exposure to loss or injury. n. What is an exposure?
Exposure. . . the potential financial effect of an event multiplied by its probability of occurrence. Potential Financial Effect of an Event Probability of Occurrence Exposure
Risk Analysis THREAT * EXPOSURE * RISK = EXPECTED LOSS
Risk Analysis Internal Controls THREAT * EXPOSURE * RISK = EXPECTED LOSS
Controls. . . An exposure consists of the potential financial effect of an event multiplied by its probability of occurrence. Potential Financial Effect of an Event $5, 000 Probability of Occurrence X 5% Exposure = $250, 000
Direct Material Variances n An example of a control system in accounting AQ X AP AQ X SP Rate Variance SQ X SP Quantity Variance
Acct 316 Acct 316 Common Business Exposures Acct 316
Common Business Exposures Erroneous Record Keeping Unacceptable Accounting Business Exposures Business Interruptions Erroneous Management Decisions
Common Business Exposures Fraud and Embezzlement Statutory Sanctions Business Exposures Excessive Costs Loss/Destruction Of Resources Competitive Disadvantage
Acct 316 Acct 316 Acct 316 What are the legal responsibilities of management? Or, what are we supposed to do?
The SEC. . . Acct 316 The establishment and maintenance of a system of internal controls is an important management obligation.
The SEC. . . Acct 316 A fundamental aspect of management’s stewardship responsibility is to provide shareholders with reasonable assurance that the business is adequately controlled.
The SEC. . . Acct 316 Additionally, management has a responsibility to furnish shareholders and potential investors with reliable financial information on a timely basis.
Legal Responsibilities Acct 316 n. Management is legally responsible nfor establishing and maintaining an adequate system of internal control.
The SEC. . . Acct 316 An adequate system of internal control is necessary to management’s discharge of these obligations.
Acct 316 OK, so what if management doesn’t do this. What then?
Enter. . . The Foreign Corrupt Practices Act
FCPA Legal Requirement Acct 316 Make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect the transactions of the registrant and the disposition of its assets.
FCPA Legal Requirement Design and maintain Acct 316 a system of internal accounting controls sufficient to provide reasonable assurances that certain specified objectives are met.
Acct 316 Acct 316 The Internal Control Structure. . . Acct 316 What is Internal Control?
Standards of Field Work Acct 316 The Field Work standards are so named because they pertain primarily to the conduct of the audit at the client’s place of business; that is, in the field.
Second Standard of Field Work Acct 316 A sufficient understanding of the internal control structure is to be obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed.
Acct 316 Acct 316 Defining Internal Acct 316 Reviewing the Control Literature
1949 Committee on Auditing Procedure Acct 316 A system of internal control should be designed to achieve objectives that are both operational and accounting in nature.
Defining Internal Control The 1958 definition was the first to differentiate between Acct 316 accounting controls and administrative controls, A distinction that is very important to independent auditors.
In 1963, chapter 5 of Statement on Auditing Procedure No. 33 attempted to clarify the distinction between administrative and accounting controls, stating that the independent auditor is primarily concerned with the latter when applying generally accepted auditing standards.
After 1963, there continued to be confusion concerning the scope of the auditor’s responsibility as it related to safeguarding of assets and the reliability of financial statements.
Acct 316 Acct 316 So. . . What is Internal Control? Acct 316
Cohen Commission Report Acct 316 Published annual reports should contain a report in which corporate management discloses the condition of the company’s internal control system.
Acct 316 Acct 316 Internal Control Acct 316 Some Recent Additions
Internal Control. . . Acct 316 Information Systems Audit and Control Foundation – Control Objectives for Information and Related Technology COBIT
COBIT Audience: Management; Users; IS Auditors Focus: Information Technology Responsibility: Management Size: 187 Pages – 4 Documents
Internal Control Viewed as: Acct 316 A set of processes including policies, procedures, practices, and organizational structure. www. isaca. org/bkr_cbt 3. htm
Internal Control Objectives Effective & efficient operations Confidentiality Acct 316 Integrity & availability of information Reliable financial reporting Compliance with laws and regulations
Internal Control. . . Acct 316 Institute of Internal Auditors Research Foundation’s Systems Auditability and Control (SAC)
Systems Auditability and Control Audience: Internal Auditors Focus: Information Technology Responsibility: Management Size: 1, 193 pages in 12 modules
Internal Control Viewed as. . . Set of processes, subsystems, and people. Acct 316 www. theiia. org
Internal Control Objectives Effective & efficient operations Reliable financial reporting Acct 316 Compliance with laws and regulations
Internal Control. . . Acct 316 The Committee of Sponsoring Organizations of the Treadway Commission Internal Control – Integrated Framework
COSO Audience: Management Focus: Overall Entity Responsibility: Management Size: 353 pages in 4 volumes
COSO Internal control viewed as a process. Acct 316 www. coso. org
COSO Internal control objectives: Effective and efficient operations Acct 316 Reliable financial reporting Compliance with laws and regulations
Internal Control. . . Acct 316 American Institute of Certified Public Accountants – Consideration of the Internal Control Structure in a Financial Statement Audit (SAS 55)
SAS 55 & SAS 78 Audience: External Auditors Focus: Financial Statement Responsibility: Management Size: 63 pages in 2 documents
SAS 55/78 Internal control viewed as a process. Acct 316 www. aicpa. org
SAS 55/78 Internal control objectives: Effective and efficient operations Acct 316 Reliable financial reporting Compliance with laws and regulations
Acct 316 Acct 316 National Commission on Fraudulent Financial Reporting Acct 316 The Treadway Commission
Treadway Commission Emphasized the importance of internal control. Specifically. . . Acct 316 The control environment; Codes of conduct; Audit committees; and The internal audit function
Treadway Commission Acct 316 The commission reaffirmed the Cohen Commission’s call for management reports on the effectiveness of its internal controls.
COSO Report. . . Acct 316 COSO’s final report “Internal Control – Integrated Framework” was issued in September 1992 4 volumes 453 pages Thousands of hours of work
COSO Report. . . Acct 316 Provides a common definition of internal control to meet the needs of diverse users. Provides a framework against which entities can assess and improve their internal control systems.
Acct 316 Acct 316 Internal Control. . . Acct 316 The COSO Definition
COSO Internal control is a process, effected by an entity’s board of directors, management, and other personnel,
COSO designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
COSO Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations.
COSO Key Concepts Internal control is a process. It is a means to an end, not an end in itself. Internal control is effected by people. It’s not merely policy manuals and forms, but people at every level of an organization.
COSO Key Concepts Internal control can be expected to provide only reasonable assurance, not absolute assurance, to an entity’s management and board. Internal control is geared to the achievement of objectives in one or more overlapping categories.
COSO It consists of several interrelated components, with integrity, ethical values; competence, and the control environment, serving as the foundation for the other components.
COSO Coso’s Components 1. Control Environment 2. Risk Assessment 3. Control Activities 4. Information & Communication 5. Monitoring
COSO Integrated Framework Acct 316
Control Environment Commitment to integrity and ethical values; Acct 316 Management’s philosophy and operating style; Organizational structure The audit committee of the board of directors.
Control Environment Methods of assigning authority and responsibility. Acct 316 Human resources policies and practices External influences
COSO Integrated Framework Acct 316
Risk Assessment Identification of risks Acct 316 Analysis of risks Management of risks
Typical Sources of Risk Clerical and Operational employees Acct 316 Computer programmers Managers and Accountants Former Employees Customers and Suppliers
Typical Sources of Risk Competitors Acct 316 Outside persons Acts of Nature
Types of Risks Unintentional Errors Deliberate Errors (Fraud) Acct 316 Unintentional Losses of Assets Thefts of Assets Breaches of Security Acts of violence and Natural Disasters
Factors That Increase Risk Exposure Frequency Vulnerability Acct 316 Size of the potential loss
Problem Conditions Affecting Risk Exposures Collusion Computer Crime Acct 316 Lack of Enforcement
COSO Integrated Framework Acct 316
Control Activities Proper authorization of transactions and activities Acct 316
Control Activities Acct 316 Proper authorization of transactions and activities Segregation of duties
Segregation of Duties Authorization Recording Must Be Separate Custody
Control Activities Acct 316 Proper authorization of transactions and activities Segregation of duties Design and use of adequate documents and records
Control Activities Acct 316 Proper authorization of transactions and activities Segregation of duties Design and use of adequate documents and records Adequate safeguards of assets & records
Control Activities Acct 316 Proper authorization of transactions and activities Segregation of duties Design and use of adequate documents and records Adequate safeguards of assets & records Independent checks on performance.
COSO Integrated Framework Acct 316
Information and Communication Identify, assemble, analyze, classify, record and report transactions Acct 316 Maintain accountability for assets and liabilities Open and well-defined lines of communication
COSO Integrated Framework Acct 316
Monitoring Effective supervision Responsibility accounting Acct 316 Internal auditing
COSO Integrated Framework
Acct 316 Acct 316 Internal Control. . . Acct 316 Classifications
Preventive, Detective, and Corrective Controls Input Process Output Sensor Corrective Controls Benchmark Detective and Corrective Controls
Control Classifications By Objectives Administrative By Settings General Accounting Application Input Processing Output By Risk Aversion Corrective Preventive By System Architectures Manual Systems Computer Based Systems Batch Processing Online Processing Data Base Detective
Acct 316 Acct 316 Internal Control. . . Acct 316 Some Common Grounds
Some Common Ground ŒA system of internal control is not an end in itself. Acct 316 It is, rather, a means to an end. Internal control is a system Clearly defined goals Interrelated components acting in concert to achieve those goals.
Some Common Ground Establishing a viable internal control system in management’s responsibility. Acct 316 The strength of any internal control system is largely a function of the people who operate it.
Some Common Ground Acct 316 Internal control cannot be expected to provide 100% assurance that the organization will reach its objectives. ‘ Internal control is not “free; ” it has a cost associated with it.
- Georgia coam
- Acct 100
- Fob shipping point accounting
- Where is preferred dividends on financial statements
- Association for challenge course technology
- Acct 2210
- Acct 2210
- 316 stainless steel table
- Princeton cos 316
- Cs 316
- 316 loài vẹt
- Ee 316
- Ee 316
- Ucc 2-313
- Intermediate accounting chapter 1
- Cost management accounting and control
- Cost management accounting and control
- External users of accounting information are
- Tactical accounting and financial information system
- Accounting information technology and business solutions
- External and internal users of accounting information
- Internal users of financial reports
- Chapter 15 using management and accounting information
- Management accounting information system
- Introduction to computer in accounting
- Materiality accounting concept
- Social responsibility accounting ppt
- Dairy plant management
- Positive control vs negative control
- Error control and flow control
- Control and information device symbols
- Cobit control objectives
- Control objectives for information and related technology
- Cobit ai6
- Payable ledger control account
- Minority balance in control account
- An endorsement indicating a new owner of a check
- Nature of management accounting
- Intermediate accounting kieso
- Dbms in accounting
- Chapter 7 accounting information systems
- Chapter 7 accounting information systems
- Revenue cycle dfd
- Accounting information system quiz
- Accounting information system شرح
- Users of accounting information
- Users of accounting information
- Klasifikasi sistem informasi didasarkan pada
- 5 users of accounting information
- Introduction to accounting information systems
- Subsystem of accounting information system
- 5 users of accounting information
- Using financial accounting information 10th edition
- E commerce accounting principles
- Ais flowchart symbols
- Accounting information system flowchart symbols
- Core concepts of accounting information systems
- Chapter 3 the accounting information system
- Chapter 1 managerial accounting
- Primary users of accounting information are accountants
- Erp accounting information system
- Basic accounting information
- Accounting information system
- Cash receipts journal example
- Chapter 7 accounting information systems
- Accounting information system chapter 1
- Accounting information system chapter 1
- Accounting information system chapter 1
- Accounting information systems marshall b romney
- Translational research institute on pain in later life
- Fluid mechanics
- Stock control e flow control
- Control volume vs control surface
- Negative control vs positive control
- Jelaskan tentang error control pada data link control?
- Control de flujo parada y espera
- Negative control vs positive control examples
- Scalar control vs vector control
- Komponen pada ltspice
- Santa monica rent control mar
- Hendela
- Infection control information
- Imperfect information vs incomplete information
- Opportunities and challenges in media and information.
- What are the trends in media and information
- The difference between data information and knowledge
- The writer properly quotes and cited sources in some places
- Law and ethics in information security
- Fifo and lifo accounting
- Sabrs smarts
- Master budget and responsibility accounting ppt
- Accounting and audit board of ethiopia
- Hermanson model of human resource accounting
- Questions on accounting standards
- Accounting scope and objectives
- Agricultural accounting and finance kansas
- Ethical issues in accounting and finance
- Types of responsibility accounting
- Construction accounting basics