ACCT 001 Lecture Notes - Lecture 25: Risk Assessment, Information Processing, Regulatory Compliance

• School: College of The Sequoias
• Department: Accounting (ACCT)
• Course: ACCT 001
• Professor: skaff

Document Summary

Elements of internal control: management is responsible for designing and applying five elements of internal control to meet the three internal control objectives. The elements are (1) the control environment, (2) risk assessment, (3) control procedures, (4) monitoring, and (5) information and communication. These elements form an umbrella over the business to protect it from control threats. The business"s control environment is represented by the size of the umbrella. Risk assessment, control procedures, and monitoring are the fabric that keeps the umbrella from leaking. Information and communication link the umbrella to management. Control environment: a business"s control environment is the overall attitude about the importance of controls and it forms the foundation for the system of internal controls. The control environment is influenced by the tone at the top that is set by management"s philosophy and operating style. A management that overemphasizes operating goals may indirectly encourage employees to ignore controls.