The document discusses internal controls, which refer to the principles, procedures, and practices that companies use to ensure oversight of risks and rectify issues. It provides examples of common internal controls like separating duties, using passwords, and reviewing reports. The objectives of internal controls include preventing errors, fraud, and misappropriation. There are three main types of internal controls: preventive controls aim to reduce the chance of issues beforehand, detective controls help detect errors or irregularities, and corrective controls take measures to address discrepancies found.
Auditing,Introduction
Meaning, Definition and Objectives,
Differences between Accountancy and Auditing,
Types of Audit,
Advantages of auditing,
Preparation before commencement of new audit,
Audit note book, Audit working paper, Audit program,
Nature and significance of COST, TAX and Management Audit
Vouching:Meaning, Definition, Importance
Routine Checking And Vouching,
Voucher And Types Of Voucher
Vouching of receipts-cash sales,
Receipt from debtors,
Proceeds From The Sale Of Investments,
Vouching Of Payments,
Cash Purchase,
Payment To Creditors,
Deferred Revenue Expenditure.
Internal Control Unit 2 Part 3 with regards to Purchase.pptxDr. Nidhi Raj Gupta
Internal Control, Internal check with regards to Purchase, tender, Purchase department, Department Heads, Assessment or requirements, Inquiry, Placing orders, receipt of goods, Recording and making payments, internal check with regards to sales.
Verification and valuation of assets presentation by Syed Ali Gohar Shah 21/1...Syed Ali Gohar Shah Shah
This presentation was assigned by Respected Teacher SIR ATTA HUSSAIN SHAH and was presented by SYED ALI GOHAR SHAH In SINDH UNIVERSITY MIRPURKHAS CAMPUS. On the date of Monday 21/10/2019.
Auditing,Introduction
Meaning, Definition and Objectives,
Differences between Accountancy and Auditing,
Types of Audit,
Advantages of auditing,
Preparation before commencement of new audit,
Audit note book, Audit working paper, Audit program,
Nature and significance of COST, TAX and Management Audit
Vouching:Meaning, Definition, Importance
Routine Checking And Vouching,
Voucher And Types Of Voucher
Vouching of receipts-cash sales,
Receipt from debtors,
Proceeds From The Sale Of Investments,
Vouching Of Payments,
Cash Purchase,
Payment To Creditors,
Deferred Revenue Expenditure.
Internal Control Unit 2 Part 3 with regards to Purchase.pptxDr. Nidhi Raj Gupta
Internal Control, Internal check with regards to Purchase, tender, Purchase department, Department Heads, Assessment or requirements, Inquiry, Placing orders, receipt of goods, Recording and making payments, internal check with regards to sales.
Verification and valuation of assets presentation by Syed Ali Gohar Shah 21/1...Syed Ali Gohar Shah Shah
This presentation was assigned by Respected Teacher SIR ATTA HUSSAIN SHAH and was presented by SYED ALI GOHAR SHAH In SINDH UNIVERSITY MIRPURKHAS CAMPUS. On the date of Monday 21/10/2019.
This is a step by step plan of the auditing work to be performed, specifying the procedure to be followed in the verification of each item in the financial statements, and giving the estimated time required’.
Audit of Limited Companies and Audit Report
Company Auditors — appointment, qualification, powers, duties and liabilities, professional ethics of an auditor; Audit of limited companies - Banking companies, Insurance companies; Audit of co-operative societies, audit of educational institutions, Recent amendments on the appointment of auditors. Audit Report - Types of audit report, form, and contents of audit report, the distinction between report and certificate, essentials of a good report
Slide gives information about working style of internal audit department in micro-finance institution. It helps the viewer to enhance the skills and knowledge about audit activities in MFI.
This is a step by step plan of the auditing work to be performed, specifying the procedure to be followed in the verification of each item in the financial statements, and giving the estimated time required’.
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Company Auditors — appointment, qualification, powers, duties and liabilities, professional ethics of an auditor; Audit of limited companies - Banking companies, Insurance companies; Audit of co-operative societies, audit of educational institutions, Recent amendments on the appointment of auditors. Audit Report - Types of audit report, form, and contents of audit report, the distinction between report and certificate, essentials of a good report
Slide gives information about working style of internal audit department in micro-finance institution. It helps the viewer to enhance the skills and knowledge about audit activities in MFI.
Presentation on a rather difficult to understand topic initially, that is, cash control and credit control system, as applied in large and busy hotels.
Includes, skipper and paid-in-advance guests.
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While there is no blueprint or checklist that one can follow to guarantee the success of a business, much can be learned from analyzing those that have failed and those that have flourished during the same time period and under similar circumstances.
Part 1: Business Failure Analysis
Select a business that failed and one that succeeded within the last 5 years.
Identify each organization’s objectives, vision, and mission.
Determine the indicators of the business failure and success from research. These may include aspects of the leadership style, communication, structure, and so forth.
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study objectives
After studying this chapter, you should be able to:
1 Define fraud and internal control.
2 Identify the principles of internal control activities.
3 Explain the applications of internal control principles to cash
receipts.
4 Explain the applications of internal control principles to cash
disbursements.
5 Prepare a bank reconciliation.
6 Explain the reporting of cash.
7 Discuss the basic principles of cash management.
8 Identify the primary elements of a cash budget.
chapter
FRAUD, INTERNAL
CONTROL, AND CASH
7
334
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p. 346 p. 349 p. 358 p. 363
● Work Using the Decision Toolkit
● Review Summary of Study Objectives
● Work Comprehensive p. 369
● Answer Self-Test Questions
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● Go to WileyPLU S for practice and tutorials
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c07Fraud,InternalControl,andCash.qxd 8/16/10 2:19 PM Page 334
feature story
335
If you’re ever looking for a cappuccino in Moose Jaw,
Saskatchewan, stop by Stephanie’s Gourmet Coffee
and More, located on Main Street. Staff there serve,
on average, 650 cups of coffee a day, including both
regular and specialty coffees, not to mention soups,
Italian sandwiches, and a wide assortment of gourmet
cheesecakes.
“We’ve got high school stu-
dents who come here, and students
from the community college,”
says owner/manager Stephanie
Mintenko, who has run the place since opening it in
1995. “We have customers who are retired, and oth-
ers who are working people and have only 30 minutes
for lunch. We have to be pretty quick.”
That means that the cashiers have to be efficient.
Like most businesses where purchases are low-cost
and high-volume, cash control has to be simple.
“We have an electronic cash register, but it’s not
the fancy new kind where you just punch in the item,”
explains Ms. Mintenko. “You have to punch in the
prices.” The machine does keep track of sales in sev-.
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2. Internal Control
• Internal control refers to the set of
• Principles
• Procedures
• Practices
companies define to ensure they keep a
check on risk-causing factors and rectify
the same to avoid losses or frauds.
3. Internal Control Components in Real Life
Goal: Attend classes at 9 AM tomorrow.
Risks: Oversleeping, heavy traffic
4. To prevent heavy traffic from interfering with your class attendance,
you decide to leave early to give yourself extra commute time.
Leaving early is the control activity you put in place to ensure your timely attendance.
If you overslept the morning, the next time you might set a second alarm. If you had to
wake up and leave at an unrealistic time to attend the class, you may decide to stay in a
nearby hotel for the next training you attend.
Some everyday internal control procedures include:
• Locking your office when you step away from your desk
• ID cards
• Using passwords to restrict computer access;
• Locking your office or filing cabinets to discourage theft;
• Reviewing your monthly ledger reports to verify transactions.
5. Advantages
1. Detection of Errors and Frauds
2. Time Saving
3. Minimum Scope for Errors and Frauds
4. Operational Efficiency
6. 1. Transactions authorizations.
2. Efficient & Effective Transactions
3. Maintain accountability for assets.
4. Safeguarded from unauthorized access.
5. Regular Checking for differences.
6. To minimize error, fraud and irregularity
7. To prevent misappropriation.
8. To allocate duties and responsibility.
9. Accurate recording of transaction.
10. To exercise moral influence.
Objectives
8. Preventive
• Preventive controls aim to decrease the chance of
errors and fraud before they occur,
• Examples of preventive controls include:
• Separation of duties
• Pre-approval of actions and transactions (such as a
Travel Authorization)
• Access controls (such as passwords and Gatorlink
authentication)
• Physical control over assets (i.e. locks on doors or a
safe for cash/checks)
• Employee screening and training
9.
10. Detective
• Detective controls are a type of
internal control that helps
organizations detect errors or
irregularities.
• Examples of detective controls
include:
• Review of financial statements
• Reconciliation of bank accounts
• Physical inventory count
• Review of aged receivables
11. Corrective
• Corrective Control
• In this type of internal control audit, if you find a discrepancy,
it will take measures to prevent the recurrence of this error.
• Examples of corrective controls include:
• Implementing a new procedure to double-check inventory
levels after realizing that there have been several discrepancies
in the past
• Adding security cameras in an area that has experienced a
high level of theft
• Changing the locks on all doors after a break-in
•
12. Limitations
1. Manual Processes/Human Error
2. Lack of Accurate Data
3. Too Many Controls
4. Insufficient Resources
5. Management Override of Internal Controls
6. Collusion/Fraud
13. Internal Check
• The term internal check refers to
allocation of duties to the
employees in an organisation in
such a way that the work of one
person is automatically and
independently checked by the
other person from the beginning
to the end.
14. A transaction of sale may have to be split between various staffs like,
1. The preparation of invoice by Mr Ram,
2. The receipt of cash against the invoice by a third clerk Mr Sam,
3. The delivery of goods against the proof of receipted invoice
by another clerk, Mr Leo
4. Checking of outward movement of goods against delivery order by a clerk Mr Rio and
so on.
Example
16. Firstly, the Cheque is produced at the counter where the clerk
issues a token and enters the token number on the back side of the
cheque and in the token book.
17. Secondly, the cheque is then passed on to the ledger clerk who verifies the credit balance
in the account of customers and makes the debit entry therein for the amount of the
cheque.
Thirdly, the cheque is sent to an officer, who compares the signature on the cheque with
the specimen signature of the account holder and passes it for payment.
Lastly, the cheque is then sent to the cashier who makes the payment against the
token and records it in the cash register.
18. Thus, withdrawal of cash from a bank account is undertaken by four different
persons such that work of one person is checked by other person in order to
avoid the occurrence of errors and frauds.
The system of internal check is exercised in such a way that no individual person
does the entire work and the process is in the following manner.
19. 1. Responsibility
2. Completion
3. Rotation of employees
4. Automatic check
5. Reliance
6. Safeguards
7. Supervision
8. Formal sanction
9. Periodical review
Essential Charteristics/Priciples Of A Good
System Of Internal Check
20. 1.To minimize the possibility of error, fraud, and irregularity.
2.To prevent the misappropriation of cash and goods.
3.To allocate duties and responsibilities to every clerk in the organization.
4.To ensure an accurate recording of all business transactions.
5.To enhance the efficiency of the clerk in the organization.
6.To exercise moral influence over the staff member.
7.To prepare a final account with ease and efficiency.
Objectives of Internal Check
21. 1.Moral Influence on Employees
2.Determination of Employees’ Liability
3.Less Possibility of Frauds
4.Increase in Efficiency
5.Auditing Made Easy
6.Final Accounts Can Be Prepared
7.Correct and Complete Records of all the Transactions
8.Detection of Dishonesty or Irregularity
9.Test Checking Possible
Advantages of Internal check
22. Principles of Internal Check
1.Allocate the process according to the duties, responsibilities, and rights.
1.No single person should have independent control
2.The duties should be changed from time to time
3.Every staff encouraged to go on leave at least once a year.
4.The division of work should not be much expensive.
5.The financial and administrative power should be assigned very judiciously to different
officers.
6.A person having physical custody of assets must not be permitted access to the account books.
23. Expensive
Slackness in the Work
Not Suitable for Small Concerns
Grouping among Employees
Disadvantages of Internal Check
24.
25.
26. It ensures that:
•Business transactions are accurately and appropriately recorded.
•Books of accounts are systematically maintained as per the relevant provisions.
•No possibility of manipulation of accounts and misappropriation of business
property.
Definition of Internal Audit
An Internal Audit is a form of control, whose aim is to measure and appraise the
effectiveness of other types of control. It involves the verification of business operations
by the staff specially appointed for the purpose.