| A | B |
|---|
| Internal Control | Methods/measures used by bus. to safeguard assets and insure accuracy/reliability of acctg records |
| Internal Control System | should provide reasonable assurance of objectives |
| Control environment | attitude, conduct and integrity of management |
| Risk assessment | identify where risk of loss/assets/unreliability of acctg records=high; design accordingly |
| Monitoring | Once controls are placed, we need feedback on compliance (internal audit) |
| Establishment of responsibility | deals with authority to perform certain functions |
| Segregation of duties | separate persons perform related functions |
| Documentation procedures | invoices pre-#'d; all #s accounted for; source docs forwarded promptly for recording |
| Physical, mechanical and electronic controls | computers=passwords changed regularly; safes store important docs/cash/checks |
| Physical, mechanical and electronic controls | warehouse secure/monitored/alarmed |
| Independent internal verification | periodic verification (independent personnel) |
| Other controls | sound personnel policies (bonding-background checks), rotation of employee duties/vacations |
| Errors | arise from unintentional mistakes, negligence or inadvertence |
| Irregularities | arise from intentional mistakes or misrepresentation (fraud) |
| Collusion | where two or more employees agree to circumvent controls |
| Bank Reconciliation - Balance per bank | Add: Deposits in Transit; Subtract: Outstanding checks; add/subtract errors (depending upon nature of error) |
| Balance per book | dd: Collections by bank (note principal/int); Int. on acct; Subtract: NSF checks and bank svc chgs; Add/subtract errors |
| Principles of Cash Management 1 | Inc. speed of collection on rec'bles |
| Principles of Cash Management 2 | Keep inventory levels low |
| Principles of Cash Management 3 | Delay payment of liabilities |
| Principles of Cash Management 4 | Plan the timing of major expenditures |
| Principles of Cash Management 5 | Invest idle cash |
