Chapter 10 Section 404 Audits of Internal Control and Control Risk Review Questions 10-1 Management typically has three broad objectives in designing an effective internal control system. 1. Reliability of Financial Reporting Management is responsible for preparing financial statements for investors‚ creditors‚ and other users. Management has both a legal and professional responsibility to be sure that the information is fairly presented in accordance with reporting requirements
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Characteristics of an Effective System of Internal Control 1.) In accounting systems‚ certain controls are needed to ensure that employees are doing their jobs properly and ensure that the system runs properly. These checks are in the best interest of the organization. These controls come in the form of internal controls for the system. The internal controls are the checks that are placed in the system by the company’s own management to prevent the intentional misrepresentation of financial data
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may make a company more attractive to potential buyers‚ investors‚ and other capital sources. Under SOX Section 404‚ all publicly traded U.S. corporations are required to maintain an adequate system of internal controls. Corporate executives and boards of directors must ensure that these controls are both reliable and effective. Public Offering The transformation of going from a private to public requires some extensive planning and preparation. It is recommended that LJB‚ being a relatively
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Table of Contents STAGE B: ASSESSING THE PRELIMINARY LEVEL OF CONTROL RISK 2 ASSESSING CONTROL RISK 2 Assessing control risk below the maximum level 5 Assessing Inherent Risk …………………………………………………………………………………………..…………………5 Relationship Between the Assessments of Inherent and Control Risks…………………………..……..……6 Identifying Specific Controls Relevant to Specific Assertions………………………………………………..……..6 Types of Control Activities that Relate to Financial Statement Assertion……………………………..……..7 STAGE C: OBTAINBING
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iii. Implement Internal Controls The objective of internal control is to safeguard assets of the firm‚ ensure accuracy and reliability of accounting record‚ promote the efficiency of the firm’s operation‚ and to measure compliance with management’s policies. Besides that‚ the internal control is used to controls and checks consolidated into accounting activities and operations of a company to ensure their business operations are conducted efficiently and effectively (Trenerry‚ 1999). Valeant Pharmaceuticals
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ACCOUNTING SYSTEMS‚ INTERNAL CONTROLS‚ AND ETHICS Prepared for the course team by Vimlesh B. Narayan Unit 1 Contents Unit 1 Contents 2 Concept Map 3 Learning Outcomes 4 1.1 Introduction 5 1.2 Accounting System Design 6 System Objectives and Design Factors 6 Designing the System 8 1.3 Internal Control Systems 17 Objectives of Internal Control Systems 17 Structure of Internal Control Systems 18 Why You Should Consider the Components? 21 Internal Control Principles and Limitations
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Internal Control Weakness and Corrective Actions Fan Company A has eight weaknesses with the current internal control system. I will name each weakness and the corrective action for each weakness identified that will improve the internal control system to help protect the company’s cast and inventory assets and to prevent unethical actions of employees. The first internal control weakness that I found is the accountant decided not to check the references on the two part time employees. The
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Internal Accounting Control 1 Chapter 1 – Accounting Information Systems AIS (Romney) is een systeem voor betrouwbare informatie t.b.v. besluitvorming en verantwoording bestaat uit mensen‚ procedures‚ en systemen met als hoofdfuncties: het verzamelen en opslaan van gegevens over bedrijfstransacties zodat de organisatie kan vaststellen wat er is gebeurd het management voorzien van relevante besluitvormingsinformatie het zorgen voor adequate beheersmaatregelen om te waarborgen dat de informatie
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Case Study 2 – Internal Control 1. Inform the President of any new internal control requirements if the company decides to go public. As per the accident that happened in the company about some employees was viewing pornography on company computer and he had a hard time to get his employees admitted that they were the one who doing it. He should use limit access by individual passwords for each person to log in the computer systems. To make sure that which person was log on in the computer and
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| MANAGERIAL USE ANLYSIS | CASE STUDY 2 INTERNAL CONTROL | 12/1/2012 | Case Study 2 Internal Control . A requirement is important to know that all publicly traded U.S. corporations are required to maintain an adequate system of internal controls and procedures for financial reporting in accordance with the Sarbanes-Oxley Act Section 404. It is the responsibility of your executives to ensure there are dependable and effective controls in place‚ and auditors from outside the company
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