learning objective 1 describe the sarbanes-oxley act of 2002 and its impact on internal controls and...
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Learning Objective 1Learning Objective 1
Describe the Sarbanes-Oxley Act of 2002 and its impact on internal controls and financial reporting
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Sarbanes-Oxley Act of 2002
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Learning Objective 2Learning Objective 2
Describe and illustrate the objectives and elements of internal control
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Objectives of Internal Control
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Elements of Internal Control
• Control environment• Risk assessment• Control procedures• Monitoring• Information and communication
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Control Environment
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Risk Assessment
Identifies risks so management can
take steps to control them
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Control Procedures
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Monitoring
• Locates weaknesses and improves control effectiveness
• Includes on-going efforts and separate evaluations
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Information and Communication
Risk Risk AssessmentAssessment
ControlControlEnvironmentEnvironment
MonitoringMonitoring
ControlControlProceduresProcedures
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Limitations of Internal Controls
Human ElementsHuman Elements Cost / Benefit of SystemCost / Benefit of System
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Learning Objective 3Learning Objective 3
Describe and illustrate the application of internal controls to cash
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The Nature of Cash
• Coins
• Currency
• Checks
• Money Orders
• Money on Deposit
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Cash Received from Sales
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Cash Received in the Mail
Remittance AdviceRemittance Advice
Person Opening MailPerson Opening Mail
CheckCheck DepositDeposit
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Cash Received by EFT
Company BankCompany BankCustomer BankCustomer Bank
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Control Over Cash Payments
VoucherVoucher
Check issued toCheck issued tovendorvendor
Approved voucher Approved voucher entered to Systementered to System
Invoice, Invoice, Purchase Order, andPurchase Order, and
Receiving ReportReceiving Report
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Learning Objective 4Learning Objective 4
Describe the nature of a bank account and its use for controlling cash
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Nature of a Bank account and its use for controlling cash
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Bank Statement Reconciliation
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Steps in the Reconciliation Process
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NetSolutions - Sales Transactions
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End of Chapter 5End of Chapter 5