ACT 205 Chapter Notes - Chapter 4.2: Money Market Fund, Internal Control, Risk Assessment
Document Summary
Sets the ethical tone of the company with respect to internal control. Identifies and analyzes internal and external risk factors that could prevent a company"s objectives from being achieved: control activities. Policies and procedures to protect a company"s assets. Keep error/fraud from occurring in the first place. Needs to occur on an ongoing basis: information and communication. Depend on the reliability of the accounting information system itself. *top executives must take final responsibility for their establishment and success. When two or more people act in coordination to circumvent (find a way around) internal controls. *effective internal controls and ethical employees alone cannot ensure a company"s success or even survival. Short-term investments that have a maturity date no longer than 3 months from the date of purchase. *whether a customer uses cash or check to make a purchase, it is recorded as a cash sale. Common controls over cash receipts: open mail each day and make a list of checks received.
