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control environment (elements of control envronment (1) Philosophy &…
control environment
elements of control envronment
1) Philosophy & style of senior management
management factors that may influence the risk regarding philosophy and operating style
1.single person dominating operations and financial decision making 2.high turnover of management aggressive approach management
application of standards by management
most effective way to convoy a massage is by setting examples
senior management should communicate org.’s values & behavior standards to personnel
3.address conflicts of interest illegal and improper payments
the 4 fundamental management principles 1.planning
organizing
3.directing
4.conrolling
3) Methods used to communicate tasks & responsibilities
4 methods of communicating and taking responsibility
1.organisational policy 2.assignment of duties and delegation of authority 3.job description 4.company system documentation
2) Organisational structure (hierarchy)
provides a framework for 1.planning organizing 3.directing controlling
4.human resources
includes rules of organisation about 1.appointment
2.training
3.evaluation
4.promotion
5.remuneration
6.supply of resources
1.appointment of staff and remuneration 2.personnel scheduling
3.rotation of duties
4.career path possibilities
5.psychological control -
maintain high morale
internal control activities
types of internal control activities
1.segregation of duties 2. proper authorization of transactions and activities 3. adequate documents and records safeguarding of assets and information 4. independent checks
classification of internal control activities
3 main categories of internal control 1.corrective controls
2.preventative controls
detective controls
risk assessment
managements responsibility to the following regarding risks
identify 2.measure 3.analyse 4.control
management has a choice of either accepting the risk or addressing the risk
information and communication
information need to be identified, captured and communicated in suitable form to enable people to carry out responsibility
monitoring
assessing quality to perform