Chapter 3 Notes

Define and explain internal controls and their purpose

define and represent risks

summarize and critique internal controls

safeguard assets

ensure reliable financial reporting

promote operating efficiency

compliance with management directives

Monitoring

Information and Communication

control activities

risk assessment

control environment

Examples

separation of duties

document matching

bank reconciliation

job rotation

process of internal control

widespread responsibility

broad range of organizations

reasonable assurance using cost/benefit ratio

financial

market

credit

liquidity

operational

systems

human error

strategic

legal and regulatory

business strategy

hazard risk

directors and officers liability