Business Administration 2257 Chapter Notes - Chapter 7: Electronic Funds Transfer, Internal Control, Accounting Scandals

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Amy Shuh

Document Summary

Fraud an intentional act to misappropriate (steal) assets or misstate financial statements. Sarbanes-oxley act (sox) a reaction to accounting scandals that requires public companies to maintain adequate systems of internal controls and to have senior company officers sign certificates to that effect. Internal control consists of all the related methods and measures adopted within a company to help it achieve reliable financial reporting, effective and efficient operations, and compliance with relevant laws and regulations. Authorization an essential characteristic of internal control is the assignment of responsibility to specific employees. This is most effective when only one person is authorized to perform a specific task. Segregation of duties segregation of duties is essential in a system of internal control because the responsibility for related activities should be assigned to different individuals. When the same individual is responsible for related activities, the potential for errors and irregularities is increased. Documentation documents provide evidence that transactions and events have occurred.