Ch.4 Cash and Internal Controls

Who is responsible for providing an opinion on management's assessment of internal control?

The company's auditors

The asset most susceptible to fraudulent activity is(are)

cash

When two or more persons work together to circumvent internal control procedures and commit a fraud, this is called _____________

collusion

The Sarbanes-Oxley Act applies to

companies that are required to file with the SEC.

the ______________ ____________ sets the overall ethical tone of the company with respect to internal control.

control, environment

The Committee of Sponsoring Organizations (COSO) of the Treadway Commission provided a framework for

designing an internal control system.

The two types of control procedures are preventive and ___________

detective

The use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employer's resources is called occupational

fraud

When a person intentionally deceives another person or company for personal gain, this is referred to as ___________

fraud

A periodic performance review is an example of a(n) ________ control

internal

A company's plans to safeguard company assets and enhance the reliability and accuracy of accounting information are referred to as

internal controls.

The most common source of occupational fraud is:

misuse of company resources

Separation of duties and E-commerce controls are examples of ______ controls.

preventive

Two types of control activities are

preventive and detective controls.

Careful consideration of internal and external factors that may cause harm to a company is called______________ assessment

risk

Which of the following are detective controls?

-Performance reviews -Reconciliations -Audits

Which of the following are preventive controls?

-Physical controls -Separation of duties

The two most common sources of occupational fraud are:

-financial statement manipulation -misuse of company resources

The key provisions of the Sarbanes-Oxley Act include

-restricting activities of auditors to prevent conflicts of interest. -requiring that corporate executives certify financial statements. -requiring documentation and assessing effectiveness of internal controls.

The kInternal control consists of plans to

-safeguard company assets. -provide accurate and reliable accounting information.

The framework for designing an internal control system is provided by the

Committee of Sponsoring Organizations (COSO) of the Treadway Commission.

Which of the following led to the passage of the Sarbanes-Oxley Act of 2002?

High profile accounting scandals during the early 2000s

For internal control purposes, risk assessment considers which two types of risk?

Internal and external risks

Which of the following is classified as part of the control environment?

Overall ethical tone of the organization with respect to internal control

High profile accounting scandals in the early 2000s prompted the passage of the:

Sarbanes-Oxley Act

The Public Company Accounting Reform and Investor Protection Act of 2002 is known as the

Sarbanes-Oxley Act.

The control environment is most affected by the attitudes and actions of

management

Who has final responsibility for internal controls?

management