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