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MGT120H5 (67)
Chapter 4

MGT120H5 (Seguin) - Lecture notes for Chapter 4 (internal control and cash) + tutorial activity

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Catherine Seguin

Lecture 5 Chapter 4February 4th 2014 Chapter 3 Review cash basisfor farmers Accrual whether or not expenses have been accrued or not Accounting principle Revenue earnedwhen it has been earned 3 types of adjustments Deferrals depreciation accruals 3 ratiosReview of Chapter 3 Question 1 COLLECTED ONE YEAR OF RENT IN ADVANCEDeferralsAug 1stDec 315 months 24000 x 51210000Journal Unearned revenue 10000Earned Revenue10000answer a CHAPTER 4INTERNAL CONTROL AND CASH FraudFraud is 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 partyIt is a huge problem and is getting bigger not only in Canada but across the globeFraud The two most common types of fraud that impact nancial statements are1 Misappropriation of assets2 Fraudulent reportingInternal ControlA plan of organization and system procedures designed implemented and maintainedby company management and board of directors to deal with risks related to Reliability of nancial records and reporting you have investors and creditors that they can rely onAbility to operate effectively and efciently Compliance with legal requirementsSarbanesOxley Act SOXThe US congress passed SOX SOX is regulated corporate governance in United StatesIn March 2004 the Canadian Securities Administrators CSA instituted a policy that requires the CEO and CFO to certify their nancial statementsComponents of internal control control environment managers show leadership Monitoring of controls Risk assessment come up with planwhat would happen if it failed what is back up plan Information system make sure transaction are captured Control proceduresInternal Control Procedures1Smart hiring practices and separation of dutiesIt starts with hiring background checks proper training and supervisionPaying competitive salaries Then
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