ACCT 200 Lecture 9 Outline of Last Lecture I Quick Notes II Problem 3 5 III Problem 3 6 IV Problem 3 8 V Problem 3 9 VI Problem 3 10 VII Problem 3 12 Outline of Current Lecture I Internal Controls II Fraud Triangle III Some objectives IV Sarbanes Oxley Act V Control Environment VI Controls of Cash Current Lecture I Internal Controls a Internal controls things put in place by a company to keep people honest ex Locks are internal controls II Fraud Triangle These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute a The Fraud Triangle consists of opportunity pressure and rationalization b These are the 3 steps that lead to someone committing fraudulent actions III Some objectives a Matching match revenues with expenses b Safeguard assets keeping money and inventory secure safes locks vaults etc c Misappropriation of assets must make sure that assets are used for business purposes IV Sarbanes Oxley Act a Know that this is only applied to public companies i A public company has stock that is traded on NYSE or NASDAQ ii A private company is held by only a few owners and stock is not sold to average people b This act requires public companies to ensure effective internal controls V Control Environment a Risk assessment figuring out where fraud is likely to happen b Control procedures procedures that assess where fraud has actually happened c Segregation of duties separate duties in order to keep people from pocketing cash profits d Collusion two or more people that are secretly working together to be dishonest and steal cash assets from a company they work for e Fraudulent statements cooking the books hiding money in your statements so you make more profit f VI Misappropriation of assets thef Controls of Cash a Handling cash this is why segregation of duties is important to ensure that more than one person is handling all of the cash it is also important that a record is kept of the cash that is received b Cash short miscellaneous expense you do not have as much cash as you are supposed to have c Cash over other revenue basically stealing from your customers not giving them the correct change d Example if you are a cashier and you have 2 000 recorded as sales on your income statement for the day but you only have 1 974 in the register this is cash short
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