tailieunhanh - Lecture Financial and managerial accounting (2nd Edition): Chapter 7 - Weygandt, Kimmel, Kieso

Chapter 7 - Fraud, internal control, and cash. This chapter’s objectives are to: Discuss fraud and the principles of internal control, identify the basic concepts of an accounting information system, describe the nature and purpose of a subsidiary ledger, explain how companies use special journals in journalizing,. | Fraud, Internal Control, and Cash 7 Learning Objectives Discuss fraud and the principles of internal control. Apply internal control principles to cash. Identify the control features of a bank account. 3 Explain the reporting of cash. 2 1 4 Dishonest act by an employee that results in personal benefit to the employee at a cost to the employer. Three factors that contribute to fraudulent activity. Illustration 7-1 Fraud triangle LO 1 LEARNING OBJECTIVE Discuss fraud and the principles of internal control. 1 Fraud Applies to publicly traded . corporations. Required to maintain a system of internal control. Corporate executives and boards of directors must ensure that these controls are reliable and effective. Independent outside auditors must attest to the adequacy of the internal control system. SOX created the Public Company Accounting Oversight Board (PCAOB). The Sarbanes-Oxley Act LO 1 Methods and measures adopted to: Safeguard assets. Enhance the reliability of accounting records. Increase efficiency of operations. Ensure compliance with laws and regulations. Internal Control LO 1 Five Primary Components: A control environment. Risk assessment. Control activities. Information and communication. Monitoring. LO 1 Internal Control LO 1 Control is most effective when only one person is responsible for a given task. Establishing responsibility often requires limiting access only to authorized personnel, and then identifying those personnel. Principles of Internal Control Activities LO 1 ESTABLISHMENT OF RESPONSIBILITY The Missing Control Establishment of responsibility. The healthcare company did not adequately restrict the responsibility for authoring and approving claims transactions. The training supervisor should not have been authorized to create claims in the company’s “live” system. Total take: $11 million ANATOMY OF A FRAUD Maureen Frugali was a training supervisor for claims processing at Colossal Healthcare. As a standard part of the claims processing . | Fraud, Internal Control, and Cash 7 Learning Objectives Discuss fraud and the principles of internal control. Apply internal control principles to cash. Identify the control features of a bank account. 3 Explain the reporting of cash. 2 1 4 Dishonest act by an employee that results in personal benefit to the employee at a cost to the employer. Three factors that contribute to fraudulent activity. Illustration 7-1 Fraud triangle LO 1 LEARNING OBJECTIVE Discuss fraud and the principles of internal control. 1 Fraud Applies to publicly traded . corporations. Required to maintain a system of internal control. Corporate executives and boards of directors must ensure that these controls are reliable and effective. Independent outside auditors must attest to the adequacy of the internal control system. SOX created the Public Company Accounting Oversight Board (PCAOB). The Sarbanes-Oxley Act LO 1 Methods and measures adopted to: Safeguard assets. Enhance the reliability of accounting .