Chapter 17
Internal Control
A set of rules and procedures that work to limit the opportunity for employee theft or malfeasance.
Deductible
An amount of loss that will not be paid by an insurance company.
Fidelity bonds
Bonds, also called dishonesty bonds, that repay employers for losses caused by dishonest or negligent employees.
Loss of key employees is a particularly acute risk for small businesses
Can be "hired away" by competitor with high salary
Insurance is determined:
Property's insurable value
Insurable Value
The amount of an asset for which a company will write an insurance policy.
Credit Insurance
covers abnormal losses from credit customers not paying their bills
Risk of Nonpayment
experienced by all businesses that offer credit
Medical
most highly desired form of insurance for most employees
Insurance
A contract between two or more parties in which one party agrees, for a fee, to assume the risk of another.
Co-insurance
A contract stipulation that requires a policyholder to carry insurance in an amount equal to a stated minimum percentage of the market value of the property insured.
Separation of Duties
A type of internal control that separates the physical control of an asset from the person accounting for that asset.
Insurance is determined:
Amount of co-insurance required
Insurance is determined:
Amount of deductible loss
Joint Venture
An agreement between two or more entities to pool resources in order to complete a project
Surety bonds
An agreement with an insurance or bonding company that will pay a specified amount in the event that the entity bonded fails to comply with specified contractual requirements.
Key Employees
Employees whose experience and skills are critical to the success of a business
Buyout Insurance
Insurance that provides money to owners of a business to buy the shares of any deceased owner from that owner's heirs.
Product Liability
Payment for injury or damage that occurs during the use of the business's products
Business Risk
The probability that your future business will be worse than you expect.
Personnel Insurance
available to protect both you and your employees from specific risks Life, Disability, Medical coverage
Tax Codes
include franchise or corporation taxes, income taxes, employee taxes, sales and use taxes, and property taxes
Coverages
Contractual provisions of insurance policies that specify what risks the insurance company is assuming.
Regulation of the Workplace
Laws and governmental rules that limit the freedom of business owners to manage their businesses as they please.
Tax Codes
Laws and regulations that specify the requirements of taxation
Insurance is determined:
Loss limits of the policy
Employee theft/pilfering
Misappropriation of business property by employees of that business.
Adverse Possession
occurs when the owner of real property does not enforce property rights and allows a nonowner to use the property as if it were his or her own.
Key person
protects you in the event that a key employee dies or is disabled and cannot work
Life insurance
provided to employees to provide security for their families
