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E8-16 Understanding internal control, components, procedures, and laws Match the following terms with their definitions. a. Two or more people working together to overcome b. Part of internal control that ensures resources are not 1. Internal control internal controls. 2. Control procedures 3. Firewalls wasted. c. Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports. 4. Encryption 5. Environment 6. Information system d. Should be prenumbered to prevent theft and inefficiency. 7. Separation of duties 8. Collusion e. Limits access to a local network. 9. Documents f. Example: The person who opens the bank statement should not also be the person who is reconciling cash. g. Identification of uncertainties that may arise due to a company's products, services, or operations. h. Examination of a company's financial statements and accounting system by a trained accounting professional. i. Without a sufficient one of these, information cannot properly be gathered and summarized. j. The organizational plan and all the related measures that safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate and reliable accounting data. k. Component of internal control that helps ensure business goals are achieved. I. Rearranges data by a mathematical process. m. To establish an effective one, a company's CEO and top managers must behave honorably to set a good example for employees. 10. Audits 11. Operational efficiency 12. Risk assessment 13. Sarbanes-Oxley Act

E8-16 Understanding internal control, components, procedures, and laws Match the following terms with their definitions. a. Two or more people working together to overcome b. Part of internal control that ensures resources are not 1. Internal control internal controls. 2. Control procedures 3. Firewalls wasted. c. Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports. 4. Encryption 5. Environment 6. Information system d. Should be prenumbered to prevent theft and inefficiency. 7. Separation of duties 8. Collusion e. Limits access to a local network. 9. Documents f. Example: The person who opens the bank statement should not also be the person who is reconciling cash. g. Identification of uncertainties that may arise due to a company's products, services, or operations. h. Examination of a company's financial statements and accounting system by a trained accounting professional. i. Without a sufficient one of these, information cannot properly be gathered and summarized. j. The organizational plan and all the related measures that safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate and reliable accounting data. k. Component of internal control that helps ensure business goals are achieved. I. Rearranges data by a mathematical process. m. To establish an effective one, a company's CEO and top managers must behave honorably to set a good example for employees. 10. Audits 11. Operational efficiency 12. Risk assessment 13. Sarbanes-Oxley Act

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Understanding Internal Control, Components, Procedures, and Laws** This section provides insights into critical terms related to internal control systems within organizations. Below, you'll find key terms paired with their respective definitions. This resource is designed to help learners gain a deeper understanding of internal control mechanisms and their significance in maintaining organizational integrity and efficiency. 1. **Internal control** - j. The organizational plan and all the related measures that safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate and reliable accounting data. 2. **Control procedures** - k. Component of internal control that helps ensure business goals are achieved. 3. **Firewalls** - e. Limits access to a local network. 4. **Encryption** - l. Rearranges data by a mathematical process. 5. **Environment** - m. To establish an effective one, a company’s CEO and top managers must behave honorably to set a good example for employees. 6. **Information system** - i. Without a sufficient one of these, information cannot properly be gathered and summarized. 7. **Separation of duties** - d. Should be prenumbered to prevent theft and inefficiency. 8. **Collusion** - a. Two or more people working together to overcome internal controls. 9. **Documents** - d. Should be prenumbered to prevent theft and inefficiency. 10. **Audits** - h. Examination of a company’s financial statements and accounting system by a trained accounting professional. 11. **Operational efficiency** - b. Part of internal control that ensures resources are not wasted. 12. **Risk assessment** - g. Identification of uncertainties that may arise due to a company’s products, services, or operations. 13. **Sarbanes-Oxley Act** - c. Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports. This framework is essential for maintaining robust internal control over financial and operational procedures, which is crucial for safeguarding company assets and ensuring reliable financial reporting.
Transcribed Image Text:**Understanding Internal Control, Components, Procedures, and Laws** This section provides insights into critical terms related to internal control systems within organizations. Below, you'll find key terms paired with their respective definitions. This resource is designed to help learners gain a deeper understanding of internal control mechanisms and their significance in maintaining organizational integrity and efficiency. 1. **Internal control** - j. The organizational plan and all the related measures that safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate and reliable accounting data. 2. **Control procedures** - k. Component of internal control that helps ensure business goals are achieved. 3. **Firewalls** - e. Limits access to a local network. 4. **Encryption** - l. Rearranges data by a mathematical process. 5. **Environment** - m. To establish an effective one, a company’s CEO and top managers must behave honorably to set a good example for employees. 6. **Information system** - i. Without a sufficient one of these, information cannot properly be gathered and summarized. 7. **Separation of duties** - d. Should be prenumbered to prevent theft and inefficiency. 8. **Collusion** - a. Two or more people working together to overcome internal controls. 9. **Documents** - d. Should be prenumbered to prevent theft and inefficiency. 10. **Audits** - h. Examination of a company’s financial statements and accounting system by a trained accounting professional. 11. **Operational efficiency** - b. Part of internal control that ensures resources are not wasted. 12. **Risk assessment** - g. Identification of uncertainties that may arise due to a company’s products, services, or operations. 13. **Sarbanes-Oxley Act** - c. Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports. This framework is essential for maintaining robust internal control over financial and operational procedures, which is crucial for safeguarding company assets and ensuring reliable financial reporting.
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