Key Terms
- Internal Controls: Processes and procedures to safeguard assets, ensure accuracy, and prevent fraud
- Control Framework: Structure for implementing and maintaining internal controls
- Segregation of Duties: Separating incompatible functions (authorization, recording, custody, reconciliation)
- Compensating Controls: Additional controls that compensate for lack of segregation
- Preventive Controls: Controls that prevent errors or fraud from occurring
- Detective Controls: Controls that detect errors or fraud after they occur
- Corrective Controls: Controls that correct errors or fraud after detection
- Cash Controls: Controls protecting cash from theft and ensuring accurate recording
- Bank Reconciliation: Process of comparing bank records to accounting records
- Petty Cash: Small cash fund for minor expenses
- Inventory Controls: Controls protecting inventory and ensuring accurate records
- Cycle Counting: Regular counting of portion of inventory
- Accounts Receivable Controls: Controls protecting receivables and ensuring collection
- Aging Analysis: Analysis of receivables by age
- Allowance for Doubtful Accounts: Estimate of uncollectible receivables
- Accounts Payable Controls: Controls ensuring accurate payables and preventing fraud
- Purchase Order: Document authorizing purchase
- Fraud: Intentional deception for personal gain
- Asset Misappropriation: Theft or misuse of assets
- Whistleblower: Person who reports fraud, misconduct, or violations
- Retaliation: Adverse action against whistleblower
End of Chapter 34 Key Terms