Internal control structure within an organization

Discussion Board

, 15 multiple choice questions and 7 questions to be worked out. All accounting questions.

Sign-in for the website for the 7 questions would be provided so all the parts can be shown.

Everything will be in the document below.

Discussion Board

Multiple choice is due first so if it can be completed before, that would be perfect

A large part of Chapter 8 is focused on key aspects of a strong internal control structure within an organization. According to the COSO Internal Control Framework, those key aspects include: The Control Environment (“tone at the top”), Risk Assessment, Control Activities, Information and Communication, and Monitoring. Special focus is placed on the six principles of Control Activities (establishment of responsibilty, segregation of duties, documentation procedures, physical controls, independent internal verification, human resource controls), which are the core mechanisms for addressing risks and potential fraud. In fact, throughout the chapter, several real-world fraud situations are presented and tied to failures in certain components of the internal control structure, namely these Control Activities principles.

Required:

1. Conduct some basic research via the internet and identify a case where a major fraud (financial statement or other), or misappropriation of assets resulted in negative implications to the impacted company and its stakeholders (some notable cases include Enron, WorldCom, Waste Management)

2. After doing so, evaluate and document which of the key aspects of the COSO Internal Control Framework (including the key principles of Control Activities as may be appropriate) may have failed in allowing the debacle to perpetuate. Be sure to be specific in outlining the core issue of the case and how it links to the key aspect of the COSO Internal Control Framework failure you noted.

3. What could have been done to prevent the failure in the context of what you noted in your response to #2 above?

To guide you in your response, the various cases throughout the text labeled “Anatomy of a Fraud” can assist you in linking the fraud, misappropriation, to the related COSO internal control and why.

Question 1
Permitting only designated personnel to handle cash receipts is an application of the principle of:
a.
establishment of responsibility.
b.
human resource controls.
c.
segregation of duties.
d.
independent internal verification.
Question 2
Two individuals at a retail store work the same cash register. You evaluate this situation as:
a.
supporting the establishment of
responsibility.
b.
a violation of segregation of duties.
c.
a violation of establishment of responsibility.
d.
supporting independent internal verification.
Question 3
In a bank reconciliation, deposits in transit are:
a.
added to the book balance.
b.
added to the bank balance.
c.
subtracted from the book
balance.
d.
deducted from the bank balance.
Question 4
Which of the following would not
be reported on the balance sheet
as a cash equivalent?
a
.
Sixty-day certificate of
deposit.
b
.
Commerical paper.
c
.
Money market fund.
d
.
Six-month treasury bill.
Question 5
Deposits in transit are those that:
a are checks from
. customers which have not
yet been received by the
company.
b have been recorded on
. the company’s books but
not yet by the bank.
c have not been recorded
. by the bank or the
company.
d have been recorded by
. the bank but not yet by
the company.
Question 6
Computer facilities with pass key
access or fingerprint scans are:
a human resource
. controls.
b physical controls.
.
c documentation
. procedures controls.
d hardware controls.
.
Question 7
The daily cash count of cash
register receipts made by
department supervisors is an
example of:
a
.
independent internal
verification.
b
.
segregation of duties.
c
.
establishment of
responsibility.
d
.
human resource
controls.
Question 8
The use of prenumbered checks
in disbursing cash is an
application of the principle of:
a
.
documentation
procedures.
b
.
segregation of duties.
c
.
physical controls.
d
.
establishment of
responsibility.
Question 9
Which of the following was not a
result of the Sarbanes-Oxley
Act?
a The Public Company
. Accounting Oversight
Board was created to
establish auditing
standards and regulate
auditor activity.
b Companies must file
. financial statements with
the Internal Revenue
Service.
c All publicly traded
. companies must maintain
adequate internal
controls.
d Corporate executives and
. board of directors must
ensure that controls are
reliable and effective, and
they can be fined or
imprisoned for failure to
do so.
Question 10
Which of the following is not a
factor of the fraud triangle?
a.
Rationalization.
b.
Financial Pressure.
c.
Opportunity.
d.
Segregation of
duties.
Question 11
Allowing only the treasurer to
sign checks is an example of:
a independent internal
. verification.
b human resource
. controls.
c
.
establishment of
responsibility.
d physical controls.
.
Question 12
If a check correctly written and
paid by the bank for $724 is
incorrectly recorded on the
company’s books for $742, the
appropriate treatment on the
bank reconciliation would be to:
a deduct $724 from the
. bank balance.
b deduct $724 from the
. book balance.
c add $18 to the book
. balance.
d add $18 to the bank
. balance.
Question 13
Mary Rudolph has worked for
Claus, Inc. for20 years without
taking a vacation. An internal
control feature that would
address this situation would be:
a
.
physical controls.
b
.
documentation
procedures.
c
.
human resource
controls.
d
.
establishment of
responsibility.
Question 14
When conducting a bank
reconciliation, each of the
following items represent
reconciling items for the book
cash balance except:
a outstanding checks.
.
b electronic payments
. collected by the bank.
c bank service charges.
.
d NSF checks.
.
Question 15
In preparing a bank
reconciliation, outstanding
checks are:
a added to the balance
. per books.
b deducted from the
. balance per books.
c deducted from the
. balance per bank.
d added to the balance
. per bank.
Discussion Board
A large part of Chapter 8 is focused on key aspects of a strong internal control structure within an
organization. According to the COSO Internal Control Framework, those key aspects include: The Control
Environment (“tone at the top”), Risk Assessment, Control Activities, Information and Communication, and
Monitoring. Special focus is placed on the six principles of Control Activities (establishment of
responsibilty, segregation of duties, documentation procedures, physical controls, independent internal
verification, human resource controls), which are the core mechanisms for addressing risks and potential
fraud. In fact, throughout the chapter, several real-world fraud situations are presented and tied to failures
in certain components of the internal control structure, namely these Control Activities principles.
Required:
1.
Conduct some basic
research via the internet and
identify a case where a major
fraud (financial statement or
other), or misappropriation of
assets resulted in negative
implications to the impacted
company and its stakeholders
(some notable cases include
Enron, WorldCom, Waste
Management)
2.
After doing so, evaluate
and document which of the key
aspects of the COSO Internal
Control Framework (including
the key principles of Control
Activities as may be
appropriate) may have failed in
allowing the debacle to
perpetuate. Be sure to be
specific in outlining the core
issue of the case and how it
links to the key aspect of the
COSO Internal Control
Framework failure you noted.
3.
What could have been
done to prevent the failure in
the context of what you noted in
your response to #2 above?
To guide you in your response,
the various cases throughout
the text labeled “Anatomy of a
Fraud” can assist you in linking
the fraud, misappropriation, to
the related COSO internal
control and why.