ACT 205 Lecture Notes - Lecture 10: Child Custody, Debit Card, Financial Statement
Document Summary
A deliberate act by an employee that results in personal benefit to the employee at a cost to the employer through misuse or misapplication of resources. Three elements present in fraudulent activity: opportunity, financial pressure, rationalization. Improve accuracy and reliability of accounting information by detecting. One out of every three employee thefts involve organizations in financial services or non-profit industries. More than 40% of thefts were committed by an employee in the finance/accounting function. Four of every five victim organization has fewer than 100 employees. Keeps errors from occurring: separation of duties. Segregate record-keeping from physical custody: proper authorization. Formal guidelines for cash receipts and purchases: physical controls. Actual vs. expected and year-to-year comparisons for results and processes: reconciliations. Independent review of financial records and internal controls. Can"t turn a bad employee into a good one. Because cash is especially susceptible to theft, internal control of cash is a key issue.
