ACCT207 Chapter Notes - Chapter 7: Bank Reconciliation, Electronic Funds Transfer, Bank Statement

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Document Summary

Fraud- dishonest act by employee resulting in personal benefit at cost of employer. 3 main factors: opportunity: workplace provides opportunity, financial pressure: personal financial problems aka debt, rationalization: rationalize dishonest acts. Internal control- all related methods and measure adopted w/in organization to safeguard assets, enhance reliability of accting records, increase efficiency of operations, ensure compliance with laws and regulations. Safeguard assets- make daily deposits so there"s not cash on premisis, protect inventory (ex: keys to jewelry cases), only employee internal control if its cost beneficial. Principles of internal control activities: establishment of responsibility, segregation of duties, documentation procedures, physical controls, independent internal verification, human resource controls. Establishment of responsibility- control is most affective when only one person is responsible for a given task. Segregation of duties- responsibilities for related activities are assigned to 2 or more ppl. diff individuals responsible for similar activities. Documentation procedures- prenumbered documents, and all documents should be accounted for, ensure timely recording of transaction.

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