Survey of accounting 6e chapter 5

Sarbanes-Oxley, Internal Control, and Cash Chapter ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Learning Objectives After studying this chapter, you should be able to: • Describe the Sarbanes-Oxley Act 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 in 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 ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Learning Objective Describe the Sarbanes-Oxley Act and its impact on internal controls and financial reporting ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Sarbanes-Oxley Act ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Learning Objective Describe and illustrate the objectives and elements of internal control ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Objectives of Internal Control _ _ _ ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Elements of Internal Control • • • • • _ _ _ _ _ Exhibit 6: Elements of Internal Control _ _ _ ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Control Environment Three factors influencing a company’s control environment are: •Management’s and •The company’s •The company’s _ ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Risk Assessment _ _ _ ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Control Procedures Control procedures is one of the most important elements of internal control It includes: •Competent Personnel, rotating duties, and mandatory vacations •Separating responsibilities for related operations •Separating operations, custody of assets, and accounting •Proofs and security measures ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part The Nature of Cash • • • • • Coins Currency Checks Money Orders Money on Deposit ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Cash Received from Sales ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Cash Received in the Mail Remittance Advice Person Opening Mail Check Deposit ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Cash Received by EFT Customer Bank Company Bank ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Control Over Cash Payments _ _ and _ _ voucher entered to issued to ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Learning Objective Describe the nature of a bank account and its use in controlling cash ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Nature of a Bank account and its use for controlling cash ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Learning Objective Describe and illustrate the use of a bank reconciliation in controlling cash ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Bank Reconciliation ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Steps in the Reconciliation Process Exhibit 6: Bank Reconciliation for Colter Inc _ _ _ _ _ _ _ _ _ ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Learning Objective Describe the accounting for specialpurpose cash funds ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Special Purpose Cash Funds – Petty Cash Petty cash fund of $500 is established on August Replenished the petty cash fund on August 31 There is no adjustment to Petty Cash when the fund is replenished ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Learning Objective Describe and illustrate the reporting of cash and cash equivalents in the financial statements ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part Financial Statement Reporting of Cash ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part End of Chapter ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part ... and illustrate the application of internal controls to cash • Describe the nature of a bank account and its use in controlling cash • Describe and illustrate the use of a bank reconciliation in... •Separating responsibilities for related operations •Separating operations, custody of assets, and accounting •Proofs and security measures ©2013 Cengage Learning All Rights Reserved May not be scanned,... Statement Reporting of Cash ©2013 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publically accessible website, in whole or in part End of Chapter ©2013