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Published bySibyl George Modified over 9 years ago
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Chapter 5 Sarbanes-Oxley, Internal Control, and Cash
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Learning Objectives After studying this chapter, you should be able to… Describe the Sarbanes-Oxley Act of 2002 and its impact on internal controls and financial reporting Describe and illustrate the objectives and elements of internal control Describe and illustrate the application of internal controls to cash Describe the nature of a bank account and its use for controlling cash Describe and illustrate the use of a bank reconciliation in controlling cash Describe the accounting for special-purpose cash funds Describe and illustrate the reporting of cash and cash equivalents in the financial statements
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Learning Objective 1 Describe the Sarbanes-Oxley Act of 2002 and its impact on internal controls and financial reporting
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Sarbanes-Oxley Act of 2002
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Learning Objective 2 Describe and illustrate the objectives and elements of internal control
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Objectives of Internal Control
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Elements of Internal Control Control environment Risk assessment Control procedures Monitoring Information and communication
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Control Environment
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Risk Assessment Identifies risks so management can take steps to control them
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Control Procedures
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Monitoring Locates weaknesses and improves control effectiveness Includes on-going efforts and separate evaluations
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Information and Communication Risk Assessment ControlEnvironment Monitoring ControlProcedures
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Limitations of Internal Controls Human Elements Cost / Benefit of System
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Learning Objective 3 Describe and illustrate the application of internal controls to cash
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The Nature of Cash Coins Currency Checks Money Orders Money on Deposit
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Cash Received from Sales
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Cash Received in the Mail Remittance Advice Person Opening Mail CheckDeposit
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Cash Received by EFT Company Bank Customer Bank
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Control Over Cash Payments Voucher Check issued to vendor Approved voucher entered to System Invoice, Purchase Order, and Receiving Report
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Learning Objective 4 Describe the nature of a bank account and its use for controlling cash
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Nature of a Bank account and its use for controlling cash
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Learning Objective 5 Describe and illustrate the use of a bank reconciliation in controlling cash
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Bank Statement Reconciliation
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Steps in the Reconciliation Process
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Learning Objective 6 Describe the accounting for special- purpose cash funds
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Special Purpose Cash Funds – Petty Cash
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Learning Objective 7 Describe and illustrate the reporting of cash and cash equivalents in the financial statements
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NetSolutions - Sales Transactions
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End of Chapter 5
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