Core Concepts of Accounting Information Systems, 12th Edition

Chapter 9

Introduction to Internal Control Systems

INTRODUCTION

Internal Control Defined

Internal Control System

1992 COSO REPORT

Control Environment

Risk Assessment

Control Activities

Information and Communication

Monitoring

Status of 1992 COSO Report

UPDATES ON RISK ASSESSMENT

2004 Enterprise Risk Management Framework

COSO’s 2010 Report on ERM

EXAMPLES OF CONTROL ACTIVITIES

Good Audit Trail

Sound Personnel Policies and Procedures

Separation of Duties

Physical Protection of Assets

Reviews of Operating Performance

UPDATE ON MONITORING

Guidance on Monitoring Internal Control Systems

Reviews of Operating Performance versus Monitoring

2011 COBIT, VERSION 5

TYPES OF CONTROLS

Preventive Controls

Detective Controls

Corrective Controls

EVALUATING CONTROLS

Requirements of the Sarbanes-Oxley Act

Cost-Benefit Analysis

A Risk Matrix

AIS AT WORK—USING THE COMPANY CREDIT CARD AS A NEST EGG?

SUMMARY

KEY TERMS YOU SHOULD KNOW

TEST YOURSELF

DISCUSSION QUESTIONS

PROBLEMS

CASE ANALYSES

Gayton Menswear (Risk Assessment and Control Procedures)

Cuts-n-Curves Athletic Club (Analyzing Internal Controls)

Emerson Department Store (Control Suggestions to Strengthen a Payroll System)

READINGS AND OTHER RESOURCES

ANSWERS TO TEST YOURSELF

After reading this chapter, you will:

1. Be familiar with the primary control frameworks commonly used in organizations.

2. Be familiar with an internal control system and the components of this system.

3. Understand the importance of enterprise-wide risk assessment and ...