Internal controls oversight prevents fraud under Sarbanes-Oxley

Internal Controls And Its Effects On The Oversight Of...
INTERNAL CONTROLS
Several important internal controls were lacking that may have prevented the fraud. Overall, there
was a lack of the control environment in that:
1. management lacked a commitment to ethics and integrity
2. the Board of Directors was ineffective in their oversight of management
3. organizational structure was ineffective, and
4. employee were incompetent or fearful about losing their jobs.
Management commitment to ethics was clearing lacking due to their fruadulant activity. A recurring
theme in the fraud is the improper recognition of revenue. There must be an independent and
effective audit committee within the board of directors to assess management's revenue recognition
policies and estimates. Additionally, management's attitude toward financial reporting was
aggressive. This red flag should have alerted the board of directors and the auditors to ascertain
whether management was complying with GAAP due to their financial reporting philosophy.
Just for Feet did not maintain an effective organizational structure. An example of an internal
preventative control that was lacking or circumvented is proper segregation of duties. As an
example, Just for Feet Vice President Ruttenberg was able to influence and dictate accounting
policies to accounting personnel outside his direct reporting line. The organizational structure of a
business should segregate duties related to authorizing transactions, record keeping of transactions,
and custody of assets.
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Accounting Systems, Internal Controls, and Ethics
Accounting Information Systems ACCOUNTING SYSTEMS, INTERNAL CONTROLS, AND
ETHICS Prepared for the course team by Vimlesh B. Narayan Unit 1 Contents Unit 1 Contents 2
Concept Map 3 Learning Outcomes 4 1.1 Introduction 5 1.2 Accounting System Design 6 System
Objectives and Design Factors 6 Designing the System 8 1.3 Internal Control Systems 17 Objectives
of Internal Control Systems 17 Structure of Internal Control Systems 18 Why You Should Consider
the Components? 21 Internal Control Principles and Limitations 25 1.4 Control over Revenue and
Receipts 31 Internal Control Objectives and Strategies 32 Combined Document Flows and Related
Activities 35 1.5 Control over Purchases, Inventories, ... Show more content on Helpwriting.net ...
This unit will provide you with some of the most

Internal Controls And Internal Control
Internal control plays an increasingly significant role in firms and many other organizations.
Businesspeople, especially managers, pay more attention to internal control and its relationship with
management (Krishnan, 2005). They tend to discover how internal control affects the operation of
the companies. Although managers of some companies have doubts on the value of internal control,
it directly helps managers to make open and effective management of the companies when
designing, undertaking and optimizing their plans. The definition of internal control is presented in
the first section. Then next section shows the importance of internal control, which mainly functions
as risk assessment, effective communication and monitoring, ... Show more content on
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Risk assessment is the most basic function of internal control that helps companies to prevent risks.
Risks are analyzed, considering possibility and influence, as a basis for determining how they
should be dealt with, thus, those potential risks can be identified before financial losses occur (Feng
et al., 2009). For example, a company purchases an advanced fire–prevention system including the
smoke detectors and fire alarms. This control behavior can reduce the possibility of fire accidents
that may destroy the company's physical assets. Therefore, the system is worthwhile because it
prevents the company suffering from the likelihood of fire and avoids financial losses. Internal
control systems have been advocated as a mechanism for establishing high quality management
(Altamuro et al., 2010). It is impossible to run companies without any risks. What managers need to
do is to assess the possibility of the risk and take relevant measures to prevent it occurring. The
model of risk assessment is applied to decide whether the control should be implemented. There is a
tiny flaw of the internal control. From the example it can be seen that if the cost of purchasing the
fire–prevention system surpasses the total value of the company assets, this kind of control will lose
its significance. Internal control makes great contribution to reducing

The Audit Report And Internal Control E
The Audit Report and Internal Control Evaluation
Team D Auditing has been evaluating the evidence presented by Apollo Shoes. The audit team has
developed an audit report in response to the audit and has also provided a description of the
evidence, a description of the account sampling and testing procedures used, and has also given a
brief description of the value of an audit report. This report is only to reflect Team D's opinion
regarding Apollo's internal controls, financial statements, and management's assessment.
Management Responsibilities
We have audited the financial statements of Apollo Shoes Inc., including the balance sheet, income
statement, and statement of cash flows. The company's management is responsible for ... Show more
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However, we are confirming the efficiency and effectiveness of the internal control, based on COSO
framework. It is important to mention that Apollo Shoes has a litigation suit in the preliminary stage
for $12,000,000, which intend to defend them self. It is reasonable that the loss could reach
$10,000,000 after legal fees (Louwers, 2007). No adjustments have been made to the financial
statements. Since Apollo has lost his major customer, this has raised a substantial doubt about the
ability that Apollo Shoes Inc. can continue as a going concern. The financial statements do not
include any adjustment that contemplates this uncertainty.
Description of Evidence The evidence used for the audit included several items presented by Apollo
Shoes. The team was presented with the SEC 10–K filing from 2006, as well as the minutes from
the audit committee meeting. The team also reviewed the company Letter to the Shareholders. The
SEC filing provided us with historical financial statements and a wealth of other information about
the company, including quarterly unaudited operation results. The team also reviewed the company
accounting and control procedures manual to evaluate the controls over the accounting functions of
the

The Sarbanes Oxley Act : On Internal Control
The Effects Sarbanes–Oxley Act Have On Internal Control Introduction The Sarbanes–Oxley Act
which is also popularly known as the public company accounting reforms is considered as one of the
landmark acts if one talks about the way the internal controls are talked about. What this act has
done is that it has set pretty much the new and much more controlled requirements as far as the
management of the public limited companies is concerned and how they are supposed to take care of
their management and overall business conduct (Hostak et al, 2013). At the same time, the
interesting thing about the fact is that there are some provisions of the act that also apply to the
public accounting firms (Hostak et al, 2013). Background and Need for ... Show more content on
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The fact of the matter is that there are many things that are related to the documentation and the
testing that has financial impact and what is needed on the part of the organizations is to make sure
that they take into account the automated controls that can make sure that the required effort is being
taken care off (Li et al, 2012). Organizational Internal Control The Sarbanes–Oxley Act has made
the organizations follow strict controls. The first thing that it tends to do is that looks at the way the
overall adequacy of the financial reporting is carried out with the context of the internal control
(Hostak et al, 2013). This is though very hard thing on the part of the organization as the cost
implication of carrying out such strict control is hardly going to be an issue (Hostak et al, 2013). The
components of the internal control are bound to vary from one organization to another as the
business processes are bound to be different from one place to them. The way the annual exchange
report is needed to be taken care off is another fact that has to be kept in mind (Abdioglu et al,
2015). The fact of the matter is that there must be affirmation on the part of the management that
they should establish an internal control structure that is adequate in its nature and at the same time,
it allows the better control structure as far as the

Internal Controls And The Implementation Of Sox
Internal Controls Since the implementation of SOX, companies were required to establish effective
and efficient internal controls in order to be in compliant with the SEC requirements. A company
that establishes a strong, effective internal control system finds it helps with the facilitation of
initiating, authorizing, recording, processing, and reporting financial data consistently in agreement
with GAAP. Companies with a strong set of internal controls will help companies ensure the
financial data they are reporting is accurate and truthful. According to COSO internal control is
defined as "a process, effected by an entity's board of directors, management, and other personnel,
designed to provide reasonable assurance regarding the achievement of the following objectives: 1.
Reliability of financial reporting, 2. Compliance with laws and other regulations, 3. Efficiency and
effectiveness of business operations, and 4. Protection of property" (Kanagaretnam et al., 2014 &
Kapic, 2013). Additionally, internal controls contain policy and procedures that assist the company
and management with smooth operations of all daily business functions. When companies establish
internal controls they find internal controls, they find internal controls can be divided into three
different objectives: operational objects, information objectives, and goals of acquiescence or
concordance (Kapic, 2013). Operational objective consists of guaranteeing the productivity and
efficiency of

Internal Controls Protect Businesses Essay
American stockholders have billions if not trillions of dollars invested in various publicly traded
companies throughout the country. With that much money involved, it is only wise that there be
control measures and safeguards put into place protect these investments from any unlawful or
irresponsible activity. Publicly traded companies are required by law to develop such measures.
These measures are often referred to as internal controls. These internal controls exist for two main
reasons. One reason being, to keep the employees honest. With so much money and other assets
involved in business every day, the temptation to steal or misuse those assets cannot be ignored.
Humans are flawed beings and measures need to keep such activity from ... Show more content on
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Internal controls are can be set up in several different ways based on several basic principles. One
very important principle is to establish responsibility. It is important to clearly identify who is in
charge and who is accountable for certain tasks. Without accountability, individuals will simply
"pass the buck" and avoid taking responsibility whenever something bad happens.
Companies must also set up physical control measures to safeguard assets. Several examples of such
safe guards are limiting access to cash through the use of safes and pass code protected registers.
Security cameras and alarm systems are also effective control measures.
Companies also segregate or separate related tasks and assign them to different individuals. This
makes it extremely difficult for employees to steal or misuse assets because they cannot completely
conceal their activities. For example, where I work, there are over 100 company vehicles.
Supervisors assign the vehicles, while employees drive the vehicles, and a separate vehicle
management officer (VMO) maintains vehicle usage records. If someone wanted to use a vehicle in
an unauthorized manor, they would have to somehow fraudulently obtain a vehicle from a
supervisor, use the vehicle without other employees finding out, and then conceal the use of fuel and
mileage from the VMO. The task is not impossible, but extremely difficult to accomplish. Using
independent

Internal Control Of A Business
For a business to limit fraud capabilities, it is important to have a strong set of internal control.
"Internal control is the organizational plan and all the related measures designed to . . . safeguard
assets, encourage employees to follow company policies, promote operational efficiency and ensure
accurate reliable accounting records" (Miller–Nobels, Mattison, & Matsumura, 2016). When
establishing internal control, it is important to remember the necessary components: control
procedures, risk assessment, information system, monitoring of controls and environment (Miller–
Nobels, Mattison, & Matsumura, 2016). The control procedures range from hiring trustworthy
employees though securing digital information. Risk assessment deals with assessing the company
and identifying the risks involved in operating the company. With rapid advancements in
technology, information systems must be secured, information being a valuable resource.
Monitoring of controls is another component that should not be overlooked. Internal and external
audits can help safeguard the company's assets. Finally, the environment can be thought of as the
culture of the company. Top executives leading by example in honesty helps create a fraud resistant
culture (Miller–Nobels, Mattison, & Matsumura, 2016). Given the scenario in Widget Inc., it is
important to utilize all personnel in the internal control of the company. Currently, before internal
control is evaluated, there are two employees in the office

Internal Control Assessment For A Company Essay
Internal Control Assessment for LJB Company
The President of the LJB Company has asked our company to do an internal control assessment of
his company. This company has plans to go public in the near future, and the President wants to
make sure that they are in compliance with current regulations. However, the President expressed
that they have become very comfortable and possibly too comfortable employees, when it comes to
safeguarding company monetary assets. The Internal Control Team (ICT) did find several
discrepancies which will be addressed in this report. There are requirements placed on management
to maintain an accurate accounting of the company. A failure to do so could result in penalties, fines
and/or imprisonment. The Sarbanes–Oxley Act (SOX) of 2002 requires that all public companies
have internal controls (IC) in place by keeping records and having an outside auditor's review the
records for sound accounting practices.
Good IC Practices 1. Your accountant is doing the right things to ensure that "Adequate Record"
keeping is being conducted by pre–numbering invoices. The ICT recommends that you purchase an
automated machine that prints your check immediately. Documents should be pre–numbered to
assure completeness of processing and proper transaction cutoff, and to prevent theft and
inefficiency (Harrison Jr., Horngen, Thomas, 2013). The use of technology to your advantage will
increase the accuracy of your accounting records.
Poor IC

Internal Control and Home Improvement
Ethics in Corporations Lowe's Home Improvement is a chain of retail home improvement based in
the United States. It was founded in 1946 in North Wilkesboro, North Carolina. Lowe's Home
Improvement has expanded internationally into Mexico, Canada, and joint venture with Woolworths
Limited in Australia. Lowe's Home Improvement ranked 54 in Fortune 500 for 2012, decreasing
four spots in 2011 ("Cnn money," 2012). Lowe's Home Improvement is the second largest retail
home improvement chain, behind The Home Depot. There are 1,724 Lowe's stores throughout
United States, Canada, Mexico operating with more than 234,000 employees ("Lowe 's home
improvement, 2012"). Stakeholders are individuals, groups, or organizations that have a stake in the
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Anything over $25,000 is distributed among the rest of the district. To make up $2500 in pure profit
is to sell roughly $6,000 when you calculate employee salary, utilities, and facility cost.
Marketing (Deceptive Advertising) The Federal Trade Commission (FTC) oversees any deceptive
claims of products or services. Recently, the FTC won a $40 million settlement against Sketchers'
toning shoes and apparel. Sketchers falsely represented clinic studies claiming their Shape–Ups,
Toners, Tone–Ups, and Resistance Runners would help people lose weight, and tone and strengthen
their butts, legs, and abdominal muscles. The most deceptive ad was used during Super Bowl
featuring Kim Kardashian firing her personal training for a pair of Shape–Ups. Sketchers truly
believed they would win the multiple lawsuits in different states, but choose to settle out for the ease
of the company and individuals (Bachman, 2012). Deceptive advertisement can negatively affect
internal and external stakeholders. Customer service is the most important aspect of any business.
Deceptive advertising can create a negative experience for customers, which directly affect
employees. A bad customer service experience can dramatically cost any business thousands of
dollars. The internet is the playground for anyone. This can create a bad reputation when individuals
post on their Facebook, Twitter, or other social media sites. If a business loses its customers base, it
cannot

Internal Controls Are Necessary For Organizations Of Any...
Internal controls are necessary for organizations of any nature and particularly those that are
numbers driven such as accounting, and finance. They safeguard assets, maintain records, prepare
and promote financial reports and operational efficiency, adhere to management and ensure
compliance with regulations. "Information systems encounter serious security threats that may arise
from the weakness of the internal controls and/or the nature of the competitive environment as the
need and dependency on information increases" (Hayale & Abu– Khadra, 2006). With internal
controls, organizations can bring out value and not just lessen their risk. And this is where becomes
applicable. Cobit as a framework ensures that internal controls are effective and efficient. Cobit is
the generally accepted internal control framework for IT. (ISACA, 2016). Cobit is the perfect
framework for internal controls because it supplies guidance about selecting controls the fit the
goals of an organization and its IT structures. It also targets specific goals as a vital aspect of
building a solid internal control environment. Cobit meets shareholders requirements, covers the end
to end enterprise, acts as a single integrated framework using a holistic approach and separates
governance from management. Additionally, Cobit as a framework also enables a system to audit
itself. For internal controls, Cobit is extremely effective due to its IT resources, process, and domain
to generate information. Cobit

Internal Controls
Internal Controls XACC 280 Crystal Riley Sanford September 10, 2010 Instructor Glenn Dakin
Internal Controls Internal controls are the measures a company takes to do accomplish two primary
goals; protect their assets from employee theft, robbery and unauthorized use. Internal controls are
also used to increase accuracy of company financial information, reducing the risk of errors
(accidental) and irregularities (intentional) (Weygandt, 2009). Sarbanes–Oxley Act of 2002 The
Sarbanes–Oxley Act of 2002 (SOX) was put into effect because of the corporate scams that were
being committed in that time period. Congress passed the act to force companies to keep closer tabs
on their internal controls. Under SOX, companies are required ... Show more content on
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For example, entering data and having limited tasks in an area increase the effectiveness of internal
controls. In other areas, such as cash handling combined with customer service and other various
tasks, those internal controls may not seem as important concerning the register as it does stock.
Comparison of Internal Controls Establishment of responsibility and segregation of duties are
similar in that one person is assigned and responsible for a certain asset. In establishing
responsibility, it is easy to determine who made a mistake and how it was made because one person
was responsible. In segregation of duties, one person is assigned to a certain task alternately. For
example, having one person count the cash in the office and having the other key it into the system,
to ensure numbers are not being changed to make everything appear balanced. Physical, mechanical
and electronic controls are used to safeguard assets and enhance the security of them (Weygandt,
2009). Examples would be keys only assigned to cash office personnel, the code on the vault, time
clocks and video surveillance. Independent internal verification is way of double checking the
information reported by employees. For example, managers are not directly associated with the
accounting office and they check the daily work completed by accounting office employees on a
weekly or semi–weekly basis to ensure that all reports and numbers

Case Study 2- Internal Controls
Content
Introduction.......................................................................................3
Public Offering....................................................................................3
Getting it Right...................................................................................4
Things to Ponder.................................................................................5
Conclusion........................................................................................7
References........................................................................................8 Introduction
LJB Company wishes to move forward and become a public entity. Good corporate governance
within an organization may make a company more attractive to potential buyers, investors, and other
capital sources. Under SOX Section 404, all publicly traded U.S. corporations are required to
maintain an adequate system of internal controls. Corporate executives and boards of directors must
ensure that these controls are both ... Show more content on Helpwriting.net ...
Things to Ponder
It has been observed that the company is violating the principle of control activity of segregation of
duties. The accountant is acting as the treasurer and controller. In this dual role, he purchases all of
the supplies and pays for these purchases. He also receives the checks and completes the monthly
bank reconciliation. Various frauds are possible when one person handles related activities. These
duties must be segregated to multiple personnel.
Use of the three principles of internal control segregation of record–keeping from physical custody,
documentation and independent internal verification is recommended. This will deliver an effective
system of internal controls. Any attempt at fraudulent activity will be detected unless there is
collusion among the employees.
Internal controls over cash receipts should include:
(a) designating only personnel such as cashiers to handle cash;
(b) assigning the duties of receiving cash, recording cash, and having custody of cash to different
individuals;
(c) obtaining remittance advices for mail receipts, cash register tapes for over–the–counter receipts,
and deposit slips for bank deposits;
(d) using company safes and bank vaults to store cash with access limited to authorized personnel,

and using cash registers in executing over–the–counter receipts;
(e) making independent daily counts of register receipts and

Walmart's Management Rule In Internal Controls
Walmart's Management Rule in Internal Controls
Review the report of the independent registered public accounting firm on internal controls. Explain
components of the report that meet the criteria established in Internal Control–Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and
the PCAOB. Walmart's public accounting firm is Ernst & Young, LLP (E&Y) and they have doing
the audits for a few years now. Ernst and Young performed the audit for the year ending on January
31, 2017. When Ernst &Young performed their audit, they obtained an understanding of the internal
controls Walmart uses over their financial statements, assessing the risk of material weakness, tested
and evaluated the internal controls based on the assessed risk in accordance with the Internal
Controls–Integrated Framework. From there they looked at the maintenance of record keeping
making sure transactions and disposition of assets were recorded correctly and in accordance with
the generally accepted accounting principles. They continued the audit by checking that receipts and
expenditures were made only accordance of management and the board of directors' approval. They
also took the time to make sure prevention or timely detection of the company's assets didn't result
in a material effect that would cause a dramatic difference in the financial statements based off the
Public Company Accounting Oversight Boards. (SEC.gov)
Explain management's

The Coso Internal Control Framework
The COSO Internal Control Framework The framework describes internal control as a process
designed to provide reasonable assurance regarding the achievement of objectives in the following
categories: Effectiveness and efficiency of operations Reliability of financial reporting Compliance
with applicable laws and regulations COSO goes on to state that the internal controls of an
organization can be depicted graphically using a pyramid (Appendix A). The pyramid is comprised
of five different layers representing the overall internal control system. Additionally, COSO depicts
the components of internal control as they relate to the organizations objectives listed above
(Appendix B). The "control environment" layer represents the foundation of the pyramid. COSO
cites the control environment of the organization as the foundation of any internal control structure.
The control environment reflects the overall attitude or actions of the board of directors,
management, and others concerning the importance of internal controls in the organization. This
overall attitude of upper management sends a message to the rest of the organization referred to as
the "tone at the top."For example, if upper management stresses high–quality products, a strong
positive message is sent to the organization. This would create a strong internal control
environment. On the other hand, if upper management has a reputation of looking the other way
regarding policy violations, a negative message is

An Evaluation Of Internal Control System
RESEARCH TOPIC: AN EVALUATION OF INTERNAL CONTROL SYSTEM ON FRAUD
DETECTION AND PREVENTION IN NIGERIA BANKING INDUSTRIES;
INTRODUCTION, AIMS AND RATIONALE
It is essential that every single bank have an internal audit department to make sure that their
accounting principles provide an effective means of recording and reporting monetary transactions,
providing organisation information and securing the company's asset from fraud and
misappropriation (Achibong, 1993). Strong internal controls can help to certify that aims and
purposes of banking organisations will be met; the banks will achieve lasting cost–effective goals
and keep dependable monetary and administrative reporting system. Such a structure can also help
to make sure that the banks will act in accordance with rules and regulations as well as policies,
strategies and processes and reduce the possibility of unforeseen losses or damages to the bank's
status. The most commonly accepted meaning of internal control is that of Committee of Sponsoring
Organisation of the Treadway Commission (COSO, 1992): It's the overall system of control,
monetary or otherwise, well–known by the organisation in order to keep the business of the
company in an organised, proficient way and make sure the organisation obeys the management
function specifically laid down for the benefits of the organisations.
To know if this is actually followed the use of the Nigerian banking sector would be used to
ascertain information on how internal

Kudler
Kudler Fine Foods – Internal Control and Risk Evaluation Internal controls are an integral part of a
company to provide a foundation for a safe, sound and successful organization. According to COSO,
"the three primary objectives of an internal control system are to ensure efficient and effective
operations, accurate financial reporting and compliance with laws and operations" (COSO, 1999).
Proper internal control programs can help Kudler's managers to make decisions, progress
evaluations and mitigate risks, however, all risks will not be able to be eliminated. The following
information will provide some insight into the internal controls and risks that Kudler Fine Foods
should be aware of. Internal Controls and Risks Payroll The ... Show more content on
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50). Controls Most of the processes suggested in the flowcharts were improvements made to
automate most of the processes. These improvements also required the use of IT to keep up with the
current suggestions, safeguard data integrity and improve any down time from the network. A
disaster recovery plan must be in place, a backup router at each location and current backups must
be maintained. A firewall and network security needs to be in place to prevent hackers, risks from
Internet based attacks, protection of customer personal data, and secure information traveling store
to store. The 56k modem needs to be upgraded to a DSL at the minimum or a T–1 to increase the
connection speed. As previously mentioned Kudler should consider replacing its current network
into a virtual infrastructure to reduce costs, reduce hardware components, and allows the sharing of
resources to maximize efficiency. Not only are the flowcharts helpful in describing the process, but
also there should be written documentation to clearly define policies and procedures. A well–trained
staff will be less likely to make mistakes. Conclusion Internal controls and recognizing risks are an
important to an organization in order to keep structure, policies and procedures, prevent fraud and
embezzlement, data integrity secured and physical

Internal Control-Intergrated Framework Paper
To organize reliable financial information is a necessary responsibility of the management of each
public organization. The aptitude to successfully manage the organization's business requires
accessibility to appropriate and accurate information. Furthermore, investors must trust company's
financial reports if the company wishes to raise capital in a public security market. The
management's ability to produce trustworthy, reliable, and accurate financial reports depends on the
design and success of the processes and safeguards it has put into place over their financial
reporting. Although sensible control systems fail for produce ultimate guarantees to assure that
financial reports will be free from errors or misstatements, an effective internal ... Show more
Effectiveness and efficiency of operations focus on the foundational objectives of the business, as
well as protection of resources, performance and profit goals. The reliability of financial reporting
pertains to the preparation of trustworthy published financial statements, with interim and
condensed financial statements and financial data selected from such statements (COSO, 2015).
Compliance with applicable laws and regulations approaches compliance of laws and regulations to
which the entity is subject. Each category deals with separate necessities and allow precision
towards focus to meet different needs.
The five interrelated elements of internal control draw from the way management operates the
organization and integrates it with the management process. The elements of internal control include
the control environment, risk assessment, control activities, information and communication, and
monitoring. Discipline and structure is the foundation of internal control, in combination with
integrity, ethical values, management way of thinking, operational style, and how the organization
develops their staff; the control environments offer a firm composition of a control

Internal Control Audit Standards
Jurgen Skembi Homework5 Internal Control Audit Standards a. For what purposes should an
auditors' understanding of the internal control components be used in planning an audit? An
auditors' understanding of the internal control components should be used for 3 reasons: a) To
identify the potential misstatement that might occurs b) To identify the factors that affect the risk of
material misstatement c) To influence the design of substantive procedures b. What is required for
an audit team to assess control risk below the maximum level? It is required for an audit team to
assess control risk below the maximum level to identify specific control procedures and policies
relevant to specific assertions that ... Show more content on Helpwriting.net ...
If the scope limitation is due to inability to gather sufficient evidence regarding to potential material
weaknesses, it is necessary to include the definition of the material weakness as well. d) Modify the
opinion paragraph, by stating that "the scope of our work was insufficient to enable us to express an
opinion, so we don't express an opinion". c. Other auditors have audited a significant component of
the company, including internal control over financial reporting relating to the component. If the
auditors conclude that the internal control over financial reporting is not maintained effectively by
management, auditors should express an unqualified opinion on management's assessment of
internal control over financial reporting. On the other hand, an adverse opinion should be issued on
the effectiveness of the company's internal control over financial reporting. ▪ The modification that
are needed to be made: a) Modification of introductory paragraph, stating that the management's
assessment didn't maintain an effective internal control over financial reporting. b) Adding a
paragraph that defines any material weakness identified during the audit. c) Modification of opinion
paragraph, stating that because of the effect of the material weaknesses captured, the company has
not maintained an effective internal control over financial reporting. d. The auditors believe that the
entity's management has

Internal Controls And The Audit Process
During the audit of the financial statements we will be assessing the internal controls in use as
mandated by the Sarbanes–Oxley Act of 2002. The act was designed to enhance corporate
responsibility as it relates to financial reporting issues. Section 404 covers the internal controls that
have been setup by the company. Internal controls are designed to protect the assets of a business
from misuse or loss. Internal controls also help the business to streamline processes so that goals can
be achieved at the best rate of return from the use of available assets. The remainder of this letter
contains an overview of section 404 and other regulations relating to the audit of internal controls
and a synopsis of internal control risks that have been identified within Apollo Shoes Inc. We will
also describe the relationship between internal controls and the audit process as well as outlining our
responsibilities in detecting and reporting fraud.
Section 404 of the act requires all publicly traded companies establish internal controls and
procedures for financial reporting. The system of controls must be documented, tested, and
maintained to ensure their effectiveness. To comply with section 404 Apollo Shoes Inc. has to
submit an annual report that details the four following key elements;
 Statement of responsibility issued by Apollo's chief executive officer and the chief financial
officer for establishing and maintaining adequate internal control structure and procedures

Public Governance And Internal Control
1.0 Introduction Charities in the UK and in general have come through a lot of criticisms from
external stakeholders on the state of their ineffective accountability and transparency, which portrays
that charities do not comply with effective corporate governance and internal control (CG+IC) in
order to improve their performance and credibility. The research will pinpoint the inadequacies of
CG+IC, then evaluate how when applied effectively could contribute to charities' performance and
aid credibility, which would in turn improve their income level. In order to achieve these, charities
should be prepared to undergo changes and put in place controls that would support this reality.
Charities are voluntary organisations with clear ... Show more content on Helpwriting.net ...
Charities have been involved in some areas previously envisaged as the state's responsibility, in so
doing, have created an active partnership with the government. This brought about a new wave of
change, from previously, when many of the earliest founded charities were funded by religious
groups, the nobility, or wealthy individuals, to help the neediest members of society. Presently,
charitable activities and jurisdiction in the provision of a wide range of services are funded mostly
by the state and the public. Some charities receive more funding from the state than from private
donors, (Brindle 2001); for example, The Children's Society, UNICEF UK, and Save the Children,
(mainly due to the 'purpose' of their charitable activities). The consequences of this partnership have
caused the traditional boundaries in the public, private and voluntary sectors to eventually dissipate
(Blair, 2006). In the current economic ambience, many non–profit organisations (NPO) are facing
funding cuts, as well as reduced voluntary donations. Others are facing reductions in income, whilst
the demand for their services continues to grow (Cornforth, 2012). As such, due to governmental
and public donors support received by charities, there have been

Internal Controls And Internal Control System
b) The definition offered by the Charity Commission (CC), states that IC Internal financial controls
are essential checks and procedures that help charity trustees to: i) meet their legal duties to
safeguard the charity's assets, ii) administer the charity's finances and assets in a way that identifies
and manages risk, and iii) ensure the quality of financial reporting, by keeping adequate accounting
records and preparing timely and relevant financial information. The above definitions are relevant
and in accordance to the objectives of IC systems, highlighted by Kaplan, (2012); which states that:
Internal control embodies the following: Controls attempt to ensure that risk, those factors which
stop the achievement of company objectives, are minimised. An internal control system comprises
the whole network of systems established in an organisation to provide reasonable assurance that
organisational objectives will be achieved. Internal management control refers to the procedures and
policies in place to ensure that company objectives are achieved. The control procedures and
policies provide the detailed controls implemented within the company. 2.3.0 What requirements are
there for Internal Control (IC) and Audit? The numerous financial scandals have highlighted
considerable ﬁduciary responsibilities of charitable organisation managers, including the relatively
weak regulatory oversight of the not–for–proﬁt sector. This claim reflects the list of events included

Internal Controls And An Effective Internal Control Mechanism
Internal controls can be taken as any action taken by an organization to help enhance the likelihood
that the objectives of the organization will be achieved. Every corporate body has a policy to
maintain an effective internal control mechanism relating to its financial statements and financial
reporting processes, internal and financial reporting principles, policies and systems, independent
auditor qualification and independence, internal audit function and independent auditors '
performance, compliance with legal, regulatory, corporate governance requirements (Kim, 2004).
The internal control mechanisms performed under the governance and organizational structure
established by the company's board of directors and senior management and in which all the
individual employees of the company must take part in. This assists in ensuring proper, efficient and
effective performing of the company's activities in accordance with the management's strategy and
policies and applicable laws and regulations and to ensure the integrity and the reliability of the
accounting and financial system and timeliness and accessibility of information in the data system
(Kim and Nofsinger, 2007). The financial, operational, and other control systems conducted by
internal controllers and which involve monitoring, independent evaluation, and timely reporting to
management levels systematically. This ensures that all the activities are performed by the
company's management levels in compliance with

Internal Control Essay
Internal Control – Integrated Framework Executive Summary Senior executives have long sought
ways to better control the enterprises they run. Internal controls are put in place to keep the company
on course toward profitability goals and achievement of its mission, and to minimize surprises along
the way. They enable management to deal with rapidly changing economic and competitive
environments, shifting customer demands and priorities, and restructuring for future growth. Internal
controls promote efficiency, reduce risk of asset loss, and help ensure the reliability of financial
statements and compliance with laws and regulations. Because internal control serves many
important purposes, there are increasing calls for better internal ... Show more content on
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Risk Assessment Every entity faces a variety of risks from external and internal sources that must be
assessed. A precondition to risk assessment is establishment of objectives, linked at different levels
and internally consistent. Risk assessment is the identification and analysis of relevant risks to
achievement of the objectives, forming a basis for determining how the risks should be managed.
Because economic, industry, regulatory and operating conditions will continue to change,
mechanisms are needed to identify and deal with the special risks associated with change. Control
Activities Control activities are the policies and procedures that help ensure management directives
are carried out. They help ensure that necessary actions are taken to address risks to achievement of
the entity's objectives. Control activities occur throughout the organization, at all levels and in all
functions. They include a range of activities as diverse as approvals, authorizations, verifications,
reconciliations, reviews of operating performance, security of assets and segregation of duties.
Information and Communication Pertinent information must be identified, captured and
communicated in a form and timeframe that enable people to carry out their responsibilities.
Information systems produce reports, containing operational, financial and compliance–related
information, that make it possible to run and control the business. They deal

Motorola Inc.: Standards of Internal Control
STANDARDS OF INTERNAL CONTROL Issued April 2007 Table Of Contents I. II. III. IV. V. VI.
VII. 1.0 2.0 3.0 4.0 5.0 Preface Objective Scope Process Responsibility Fraud Revisions
Introduction General Control Requirements Quick Reference Revenue Cycle 2.1 Order Entry/Edit
2.2 Loan/Financial Aid 2.3 Billing 2.4 Accounts Receivable 2.5 Collection 2.6 Cash Receipts
Procurement Cycle 3.1 Supplier Selection and Retention 3.2 Purchasing 3.3 Receiving 3.4 Accounts
Payable 3.5 Disbursements Payroll Cycle 4.1 Human Resources, Compensation, and Benefits 4.2
Payroll Preparation and Security 4.3 Payroll Disbursement Controls 4.4 Distribution of Payroll
Financial Reporting Cycle 5.1 Accumulation of ... Show more content on Helpwriting.net ...
This system recognizes the need to comply with the expectations of our students, alumni, vendors,
faculty/staff and our community. The Audit Committee of the Arizona Board of Regents, the State of
Arizona Office of the Auditor General, University Audit and Advisory Services, (UAAS), the
Financial Controls division of Financial Services and each Business Administrator (BA) across the
university are responsible for monitoring our adherence to these standards. III. SCOPE These
standards are applicable to all campuses, colleges, services and departments. The standards
generally reflect control objectives and do not attempt to describe the specific techniques required in
each area. These internal controls are designed to provide reasonable, but not absolute, assurance
regarding the safeguarding of resources, reliability of operating and financial information, and
compliance with laws and regulations. The concept of reasonable assurance recognizes that the cost
of a control should not exceed the benefit to be derived. It also recognizes the need for
uncompromising integrity, good business judgment, and a culture of good control practices. In
management 's selection of procedures and techniques of control, the degree of control employed is
a matter of reasonable judgment. When it may be impractical or impossible to institute any of the
controls listed, as could be the case of a small or remote

The Internal Controls Of A Company
The internal controls of a company show the extent of adherence to accounting standards and
internal auditing standards as postulated by the IASB. In the case of Smackey Dog Foods, we realize
that there are so many issues pertaining internal controls. The company thus has hired external
auditors to perform an audit of its internal operations to reveal all the perceived weaknesses in
internal controls and provide recommendations for improvement.
Smackey Dog Foods has not been specifically stated as a private or public company. If it is public
entity, it would be required to undertake annual audit by a firm that is independently registered as
per the rules of SEC. However, Smackey Dog Food Company appears to be a company that is
privately owned and thus SEC rules would require the company to comply with the US GAAP in
accordance with the guidance from the American Institute of Certified Public Accountants. The
above is required because the standards of independence, objectivity and integrity of SEC and
AICPA correspond and thus giving the same effect on the operations of the company.
The problem of independence develops when Ben crushed on the Smackey Food Dog Book keeper.
The issue of integrity also arises from the involvement of Maureen in the catching of the significant
defalcation in the books of another client which resulted to the conduct of a federal investigation and
the subsequent incarceration of the clients CFO and board member respectively.
1
The SEC has

Internal Controls Of Leisure Holidays Limited
Answer 1
Mohit Saini
8/1 Roxy Street
Auckland, New Zealand June 5, 2017 Brian and Valerie Baxter
Chairman, Board of Directors,
Baxter Group
Bay of Islands Dear Brian and Valerie Baxter, Management Letter
I have finished the review of the internal controls of Leisure Holidays Limited. This management
letter describes internal control issues emerging from my audit findings that I consider suitable for
review by management. The audit procedure prepared does not address all internal control.
Accordingly, the audit procedures stated would not necessarily disclose all shortcomings in the
internal control of Leisure Holidays Limited. There could be some additional issues to be dealt apart
from those mentioned in this letter. ... Show more content on Helpwriting.net ...
They don't conduct formal performance review of their employees and are totally dependent on
them to find about any misstatement or error.
Recommendation: LHL should implement appropriate processes and controls to ensure sound
management process, controls and practices. They should design policies and procedures for each of
entity activities. Besides that, actual performance should be routinely reviewed against the budget or
forecasted performance. Following issues have been identified in the internal control:
Separation of duties
Observation: Valerie acts as both director and CFO of LHL. She could easily supersede the internal
control of the company, thereby creating a greater risk of errors or fraud. Moreover, Karen and
Angela are not complying by their job role. Authorising each other work without proper knowledge
can lead to material misstatement.
Recommendation: Job responsibility of each employee should be defined properly in writing. Few
work tasks could be reassigned to distribute the workload uniformly. Moreover, accounts should be
reconciled regularly and employees should be supervised frequently. Documentation
Observation: There is no supporting documentation in the past to demonstrate the existence of
transactions and procedures performed.
Recommendation: Supporting documents should be maintained adequately for developing an
effective internal control. Oversight and Review:

Internal Control for Inflows
RUNNING HEAD: Internal Control for Inflows
ACC/ 544
Internal controls are important to a business. The internal controls provide a safeguard against errors
in the accounting system as well as the detection and prevention of fraud. With the inflows of the
company come many risks that need to be considered. The ways in which cash, sales, accounts
receivable, inventory, and production are handled within the company are different for each
division. The internal controls may vary from department to department, but the end result is to
protect the company from the risks that can arise.
Cash
Cash is a company's most liquid asset and presents the highest inherent risks for ... Show more
"If these controls fail, orders could be processed for fictitious customers, credit could be approved
for bad credit risks, and shipping documents could be created for goods that do not exist in the
inventory" (Louwers et al., 2007, p. 253).
Another control that is essential to the sales portion is the delivery to the customer. The reason that
this control is important is because this is where the inventoried products or services leave the
company and is reassigned to the customer. "Proper authorization is important; employees
performing each of these steps should sign transfer documents so they can be held accountable. This
control procedure will prevent misappropriation the goods or shipping the product to friends without
billing them" (Louwers et al., 2007, p. 254). This control maintains the integrity of the process from
the company to the customer, and ensures that the customers are billed correctly.
Each of these controls for the sales portion of inflows are crucial to the company receiving timely
and appropriate payment for the goods and services provided to the customer.
Accounts Receivable
For a company, receiving payment for goods and services is an essential component to maintain the
ability to run operations from a financial standpoint. Regardless of how often billing is completed;
the ability to receive the payments from the customer can be the difference in having a healthy
company and one that is forced out

Internal Control and Sunshine Center
Task 3: Internal control 1. What do you think is the primary problem at the Sunshine Center? There
where no financial reports or summaries of the cash flows. Probably, Barb wasn't fare about the
payments. Because there was no financial report it was not clear where all the money went to. 2.
Why is accountability important to the Sunshine Center Committee? The director? Cli ents of the
Sunshine Center? Church members? It is so important to the committee so they can check if the cash
balance is still okay. The director can check if everybody does his work well and if there are no
financial problems. The clients need to know if Sunshine is fair and the church members are maybe
willing to serve the committee if they know ... Show more content on Helpwriting.net ...
Effective communication also must occur in a broader sense, flowing down, across and up the
organization. All personnel must receive a clear message from top management that control
responsibilities must be taken seriously. They must understand their own role in the internal control
system, as well as how individual activities relate to the work of others. They must have a means of
communicating significant information upstream. There also needs to be effective communication
with external parties, such as customers, suppliers, regulators and shareholders. ● Monitoring –
Internal control systems need to be monitored–a process that assesses the quality of the system's
performance over time. This is accomplished through ongoing monitoring activities, separate
evaluations or a combination of the two. Ongoing monitoring occurs in the course of operations. It
includes regular management and supervisory activities, and other actions personnel take in
performing their duties. The scope and frequency of separate evaluations will depend primarily on
an assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control
deficiencies should be reported upstream, with serious matters reported to top management and the
board. Sunshine could use monitoring, information and communication, control environment, and
control activities.

Evaluating Internal Controls
Checklist for Evaluating Internal Controls ACC/544 April 29, 2013 Christine Errico Checklist for
Evaluating Internal Controls Internal controls are methods a company implements to safeguard and
protect the company in its day–to–day operations as well as its financial information. To ensure
these controls are effective and performing properly a company must evaluate these controls. In
performing this evaluation a company should use the three phases of the control evaluation. These
phases consist of understanding the documenting of internal control, assessing the control risks, and
performing tests of the controls and reassessing control risks. Phase One: Understanding and
Documenting Internal Controls This phase of the control ... Show more content on Helpwriting.net
...
| | | 30. Are risks viewed as impacting other departments? | | | 31. Does management respond to
prospects risks, which are significant and likely? | | | 32. Are processes in place? | | | 33. Are key
indicators monitored? | | | 34. If other entities are involved with sharing the risk, are they evaluated
for soundness? | | | Monitoring Evaluation | 35. Does training sessions exist for management and
employees informing the importance of internal controls? | | | 36. Are customer complaints and
compensations analyzed? | | | 37. Are vendor complaints and compensations analyzed? | | | 38. Are
reports in compliance with laws and regulations? | | | 39. Do account managers supervise and
analyze the accuracy and completeness of transaction processing? | | | 40. Does management
periodically compare recorded amounts to actual assets and liabilities? | | | 41. Does management
consider internal auditor's reports on control performance and recommendations for improvements?
| | | Information and Communication Evaluation | | Yes | No | 42. Is information given in a timely
manner? | | | 43. Is information gathered reliable? | | | 44. Is information gathered relevant? | | | 45.
Are employees encouraged to ask questions about their duties? | | | 46. Do employees have a way to
communicate significant data and information to management in the organization? |

Final: Internal Control and Data
Claudine Perez
ACC 340 Final Examination
1. The essential steps in performing a systems study are (in order of occurrence):
a) Analysis, design, implementation and initial operation, follow‑up
b) Design, planning, follow‑up, analysis, and implementation
c) Planning, system specification, analysis, production, implementation
d) Planning, analysis, design, implementation, and follow‑up
2. Which of the following is intended to solve the problem that financial data used in one application
is not easily transferable to other applications? a) XMP b) ERP c) XBRL d) XMLP
3. Information systems auditors are:
a) Auditors who are concerned with analyzing risks associated with ... Show more content on
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Which of the following is not a concern of the financing process?
a) Effective cash management
b) Optimizing an organization's cost of capital
c) Minimizing an organization's borrowings
d) Projecting cash flows
14. Business process reengineering efforts sometimes fail because:
a. Management gets too involved in the process
e) Management is too optimistic regarding its expectations from its implementation
b. Management support can never overcome employee resistance
c. Employees will never accept change
15. Which of the following technologies are now used in conjunction with automated production
process systems to increase efficiencies?
a) Radio frequency technology
b) Bar code scanners
c) RF IDs and advanced electronic tags
d) all of the above
e) none of the above

16. According to the chapter, which of these statements is most accurate?
a) Most computer abuse is performed as retaliation against employers
b) Very little computer crime is committed for personal gain
c) Some computer abuse is performed simply to meet a challenge
d) We catch most computer abusers with good accounting controls
17.Which of the following is probably the primary reason accountants should be concerned about
computer crime and abuse?
a) They might lose their job if they don't detect computer crime or abuse in their organization
b) They might lose their professional credibility and license if computer crime or abuse continues
for a long time in their organization and they do not detect it

Internal Control and Risk Evaluation
INTERNAL CONTROL AND RISK EVALUATION PAPER
ACCOUNTING 542
INTERNAL CONTROL AND RISK EVALUATION PAPER Many businesses are concerned with
information technology risks. Many organizations are concerned with different types of risk and
attempt to control risk as they are assessed. In order to control risk, organizations must create
control environments that set the tone of employee awareness and promote operational efficiency.
One attempt to control risk is through risk assessment. The purpose of risk assessment is to identify
organizational risks and evaluate additional or specific control procedures. The purpose of this paper
is to analyze and assess the risks within the flow charts of accounts payable, accounts receivable, ...
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Major changes such as name, birth date, direct deposit, mailing address, or social security number
cannot be changed without employee signature, supporting or witness documents, and requested
change forms.
Other internal controls outside the system Kudler Fine Foods can also benefit from implementing a
few general control procedures outside the system. For example, written procedures should be
available and initialed by employees concerning how inventory is to be physically recorded and
input into the automated system. Restrict the number of employees who have keys to the premises.
Physically lock up and guard merchandise that is of high value or that can be easily converted into
cash. The use of surveillance equipment or cameras can be used to monitor physical access to
inventory and other company properties such as equipment. Provide procedures for identification of
slow moving or damaged inventories are another internal control that could be incorporated outside
the automated system. To prevent payroll related fraud, Kudler should implement an id process
when employees are hired. A current photo identification document should be scanned into the
employee file with verified address, and other vital information concerning the employee.
Notification should be given to management of employees opting out of direct deposit payment and
must obtain

Internal Control and Risk Evaluation
Internal Control and Risk Evaluation Accounting Information Systems 542 October 10, 2011
Analyze the risks in the systems that your team analyzed An Accounting Information System is an
integral part of the new design of Kudler's computer system. Accountants do not necessarily need to
understand completely how computers process data of the accounting application, but it is essential
for them to understand the flowcharts and documentation that shows how this processing works.
The purpose of the new system is to integrate the four Kudler locations. Centralizing the accounting
system will save Kudler money by automating accounting, inventory, human resources, and
purchasing. Additionally, implementing levels of security, the new ... Show more content on
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Including such checklists with the statements themselves both documents the work that the
employees performed as well as the procedures and controls involved in the work (Bragranoff,
Simkin, & Norman, 2008, p. 66). Furthermore, IT managers usually report to whoever manages
corporate accounting; and that is because most Information Technology applications deal with
accounting transactions. The issue with this chain of command is that most corporate controllers can
authorize and record certain transactions, such as accounting adjustments and accruals. If they are
also allowed to maintain custody of assets, such as information databases and software applications,
all three duties overlap fall under the same category. The result is Kudler's controller can authorize
and record seemingly valid accounting transactions while altering results to achieve fraudulent
objectives. Moreover, controllers could either make data and software changes themselves or
instruct their IT function managers to make such changes which appear to be valid requests. Kudler
has no reason not to trust their Controller however; the IT auditors have to be professionally
skeptical when designing internal control structures, regardless of the corporate position being
reviewed. Because of this, segregation of duties can be accomplished by IT managers reporting to
Human Resources so that all changes are reviewed through a different department (Hunton, Bryant,
&

Essay on Finance and Internal Control
ACCT301 Week 2 Homework 1. In two to three paragraphs, describe the Sarbanes–Oxley Act and
why it is important to the accounting profession. (15 points) The Sarbanes–Oxley Act was passed in
2002 by Congress after a series of scandals involving companies such as Enron, WorldCom, and
Tyco. This was passed because of shady transactions and misrepresented financial data which
caused shareholders to lose millions of dollars and their trust in investing in public companies. It
was passed to create new rules of accountability and accuracy for public companies. It is important
to the account profession because companies were required to have met certain conditions or face
the consequences. The Act requires all public companies to ... Show more content on
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Control Activities: This refers to the organization's policies and procedures which help ensure that
the necessary actions are taken to speak out and address potential risks. Information and
Communication: This focuses on the "nature and quality" of information that is needed in order to
effectively control the systems used to develop such information and reports used to communicate
effectively. Monitoring: This involves assessing the quality and effectiveness of the company's
internal control process over time. This includes assessing the design and operation of controls, the
compliance with polices and procedures, and making sure everything is done according to the rules.
3. Describe the relationship between the Sarbanes–Oxley Act and COSO. (10 points) There are
some close relationships between the SOX and the COSO. The COSO would essentially the
framework for the SOX which took effect in 2002, forcing businesses to comply with different rules,
policies, and producers. Though SOX is more rigorous about setting these standards and have
implemented more guidelines, the COSO was essentially what the SOX Act used in order to stop
fraud within a business setting. 4. Tom Jackson is a CPA who really likes to go to Las Vegas, play
poker, and bet on football games. Tom knows that the accounting profession disapproves of

Internal Controls And Fraud Prevention
Internal Controls and Fraud Prevention:
Overview, Analysis, and Recommendations
According to the Certified Fraud Examiners' 2012 Report to the Nations, organizations typically
lose five percent of revenues to fraud annually (Laxman, Randles, & Nair, 2014). Fraud impacts
more than just a bottom line; it can cause significant damage to a firm's reputation, seriously hurt
investors, and degrade morale and opportunities for employees. As evidenced by recent highly
publicized cases, internal controls are an important function of business and government and are
necessary in reducing the negative impact of fraud in our economy (Brucker & Rebele, 2010).
Most internal control systems implemented today are based on the five elements of the Committee
of Sponsoring Organizations of the Treadway Commission's (COSO's) Internal Control–Integrated
Framework (Laxman et al., 2014). The COSO framework was initially published in 1992 and
formed the baseline for internal control systems implemented today. It defined internal controls as a
continual process that provides reasonable assurance against fraudulent activity, and its success is
directly affected by management's ability to implement it. The COSO framework is composed of
five components: the control environment, risk assessment, control activities, information and
communication, and monitoring (Laxman et al., 2014). These components are discussed later in this
paper.
More recently, the Enron and WorldCom financial scandals

Essay on Internal Control Checklist
Comprehensive Checklist for Evaluating Internal Controls ACC/544: Internal Control Systems
Comprehensive Checklist for Evaluating Internal Controls As defined by the COSO framework,
there are five elements that are used to explain an internal control system applied in an organization.
These elements include: 1. Control Environment – The control environment is the foundation for the
other four components of internal control. It outlines discipline and structure for the internal control
method and consists of philosophy, ethical values, operating style, risk appetite, functioning of the
board, and organizational structure (Louwers, Ramsay, Sinason, & Strawser, 2007). 2. Risk
Assessment – This component evaluates the way in ... Show more content on Helpwriting.net ...
| | | | |Has the management team developed and properly conveyed the correct ethical standards to be
observed? | | | | |Have objectives and programs been created in support of the above referenced
mission statement? | | | | |Are the established objectives practical, measureable, and achievable? | | | |
|Are the programs and performance of the employees evaluated on a regular basis to determine
relevance and | | | | |achievement? | | | | |Do fiscal and operational outcome motivators interfere with
moral and ethical objectives? | | | | |Are operating methods up–to–date? | | | | |Is the morale of the
employees at an appropriate level? | | | | |Is the rate of employee turnover

Investigating The Internal Controls Of The Business...
Fraud prevention is a concern to both small businesses and large corporations alike. Business
owners place their trust into employees who are hired to perform duties that contribute to the
success of the company. When that trust is broken, or ideally before this occurs, businesses must
look to their internal controls in an effort to limit the opportunity for such malicious behavior. The
purpose of this paper is to define internal controls, explain the purpose it serves in the business
environment, and common internal control measures. Additionally, an example of internal control
from this author's employer will be discussed as well as an incidence of embezzlement found while
researching this topic. Let's first take a look at its definition and some examples. Internal controls, as
defined by Investopedia.com, are "methods put in place by a company to ensure the integrity of
financial and accounting information, meet operational and profitability targets, and transmit
management policies throughout the organization." This system works best when applied to multiple
divisions and deal with inter–departmental transactions. An example of the latter may be those
occurring between the originating department from where the transaction is originated, supply
management, and accounts payable. These methods can be broken down between a preventative and
a detective category. Preventive controls are just such: those policies and procedures that prevent an
incident from occurring.

Evaluating The Internal Control System
The auditor required to providing a reasonable assurance about the financial statements that they are
free of error or fraud by planning and performing audit work in conformity with GAAS (AU–C
240). According to AU–C 240, fraudulent financial reporting and misappropriation of assets are the
two main category of fraud. The auditor should consider the incentive or pressure upon the
employee, evaluating the environment or the opportunities to commit the fraud and looking at the
justifications to committing fraud when he assessing a likelihood of fraud (AU–C 240). However, in
the case they were incentive and pressure by management to meet the Wall Street expectations,
opportunities to acquire companies in the future, and weakness of the internal control. ... Show more
In addition, the auditor should achieve the understanding of the control environment by evaluating
the management along with honesty level, ethical principles and control environment elements to
determine the risk of misstatement. However, in the internal control evaluation he should consider
the integrity, management level, policies, and responsibilities then planning to obtain sufficient
evidence for supporting his opinion on the internal control (AS 5). CUC had a poor quality in the
internal control system and management put the pressure and incentives to meet Wall Street
expectations. A good example for override of the management on the internal control system was the
revenue recognition. AU–C 240 requires significant procedures to the possible risk in management
override controls, which are testing the journal records, reviewing accounting estimates, and
evaluating unusually

Essay on Case Study 2
Case Study Two
Name
Accounting and Finance
02Feb2011
Dear President of LJB Company,
(1) If the LJB Company should decide to become a publicly traded company, a few internal controls
should be implemented to comply with the Sarbanes–Oxley Act (SOX). * Management will need to
provide periodic quarterly reports to evaluate the effectiveness and reliability of LJB's internal
controls over financial reporting procedures. * Management should certify the accuracy and fairness
of presentation of their financial statements. * Independent auditor(s) outside of LJB will need to
attest to management's assessment of said internal controls. Additionally, non–audit services
between these two parties (LJB and said independent auditor) ... Show more content on
Helpwriting.net ...
I recommend that these checks remain physically secured at all times (by the accountant, or by
delaying delivery to the accountant until he reaches his office). * Due to the unorthodox honor
system of dealing with petty cash, any single employee can withdraw a substantial amount of petty
cash in relative anonymity. This violates two Internal Control Principles: Physical Control and
Establishment of Responsibility. It violates the Physical Control Principle because the petty cash is
easily accessible with no form of physical protection of theft, and it violates the Establishment of
Responsibility Principle because no single person is in charge of the Petty Cash Fund (rather
everyone is). This can be remedied by assigning a custodian to be responsible for the fund, as well
as creating a secure area to store said funds. * These previous points additionally bring up another
weakness, though not actually part of the Internal Control Principles. Though it seems to be LJB's
unofficial policy to trust long–term employees, when a desirable opportunity to commit fraud/theft
arises, it becomes at the discretion of the employee to commit these acts for their personal benefit. *
Another weakness is LJB's lack of individual passwords which allows personnel to anonymously
use the company computers and databases. This lack of individual accountability will prevent most
attempts to track suspicious employee activities on company

Internal controls oversight prevents fraud under Sarbanes-Oxley

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