COMMERCE 1AA3 Lecture Notes - Lecture 4: Internal Control, Financial Statement, Cheque
Document Summary
Fraud - an intentional misrepresentation of facts, made for the purpose of persuading another party to act in a way that causes injury or damage to that party. The fraud triangle includes the 3 primary elements of every fraud: motive need or greed of perpetuator, opportunity usually arises through weak internal controls, rationalization i deserve this . The primary way that fraud and unintentional errors are prevented, detected or corrected in an organization is through a proper system of internal control. Internal controls provide a shield for the company assets against fraud, inefficiency and waste. These three goals can be achieved by satisfying the following objectives: safeguard assets and records, encourage employees to follow company policy, promote operational efficiency, ensure accurate, reliable accounting records, comply with legal requirements. Three key duties should be kept separate: asset handling, record keeping offsite bookkeeper, transaction approval, proper monitoring - all internal controls must be monitored to ensure they are operating effectively and efficiently.
