Exam 4: Transaction Processing and the Internal Control Process

White-collar crime that benefits an organization rather than individuals is ________ crime.

Presented below is a list of terms relating to accounting information systems,followed by definitions of those terms. Required: Match the letter next to each definition with the appropriate term.Each answer will be used only once. ________ 1.FCPA ________ 2.Audit committee ________ 3.Collusion ________ 4.Application controls matrix ________ 5.Internal auditing ________ 6.Control environment ________ 7.Cancellation ________ 8.Statutory sanction ________ 9.Format check ________ 10.Endorsement A.Has responsibility for reviewing the reports of the company's external auditors B.The identification of documents to prevent their repeated use C.A type of exposure D.A law which requires publicly held companies to maintain adequate accounting systems E.One of the main components of internal control F.Agreement or conspiracy among two or more people to commit fraud G.An example of this procedure is: all characters in the vendor number field are numeric H.A technique for internal control analysis I.Marking a form or document to restrict its further processing J.An example of the monitoring component

Management's consideration of the relative costs for benefits of internal controls will often be subjective in nature.

Discuss why a fraud examiner needs to be educated in the fields of accounting,law,and criminology to properly perform a fraud investigation.

The department or division of larger organizations which is responsible for monitoring and evaluating controls on an ongoing basis is

Application controls are designed to provide assurance that processing has occurred.

The production cycle is defined as the events related to the distribution of goods and services to other entities and the collection of related payments.

The following three questions on an internal control questionnaire relate to comparisons of one amount to a second amount. Required: What is the purpose of each of these comparisons? a.Does the company compare budgeted amounts with actual expenditures? b.Does the company mail monthly statements of account to all customers? c.Does the company adjust inventory records to physical counts at least once a year?

Informal pressure from employees does not cause collusion.

Assets fraudulently appropriated for one's own use from an organization is considered

The Omnibus Trade and Competitiveness Act of 1988 (OTCA)amends the

The term risk is synonymous with exposure.

The Sarbanes-Oxley Act of 2002 imposes certain requirements and restrictions on

________ controls affect all transaction processing,while ________ controls are specific to individual applications.

Approval (authorization)limits the initiation of a transaction or performance of an activity to selected individuals.

Listed below are examples of several internal control procedures. Required: For the following internal control procedures,give the objective of the control: a.The stock of unused checks is kept under lock and key. b."Surprise" counts of cash funds are conducted periodically. c.All purchases must be made by the purchasing department. d.The accounting department matches invoices to copies of purchase orders.

Section 102 of the Federal Foreign Corrupt Practices Act of 1977 (FCPA)applies to

An exposure is

Most control processes can function irrespective of the competence of employees.

The formal communications patterns within an organization can be communicated using