ACCOUNTING INFORMATION
SYSTEMS FINAL EXAM
EXAM- 2027 100% CORRECT
SOLUTIONS
CHAPTER 7:
Overview of internal controls;
<1> Objectives & Limit actions
<2> Classification
<3> Cost vs Benefits
<1> Objectives & Limitations; 3 dimensions
1. Operation
a. Security: of assets
b. Efficiency: more cost oriented with employment of resources make sense with cost
c. Effective: getting done fast (prompt delivery)
2. Reliability of Reporting
i. Facebook think of data security
3. Compliance: with laws regulations and policies
Financial confirmatory for US GAAP (phrase that shows financial report)
Limitation: Financial reporting & Internal control
1. FRAUD: Very difficult to prevent even with segregation of duties
2. Human Error
3. Cost vs benefits
a. Need 1 more person to do the job
<2> Classification
a. Prevention vs Detection vs corrective
b. General controls vs business process vs application controls
- Detective controls log analysis
- Preventive controlsPhysical access control
- Corrective control emergency response team
<3> SOX (2002) – 5 requirements
1. Prohibit them (PCAOB) from performing certain audit services
2. Audit Committee Auditors auditor
3. Auditor had to be
a. 100% independent * management cannot be audit committee
b. At least one financial expert does not need CPA
c. Higher and fire external auditors: they are in charge of this
Which of the following is not important aspect of the Sarbanes-Oxley act?
➔ New rules for information system development
4. CEO & CFO certify SEC reporting
, 5. Sarbanes Oxley act SOX 404
Which is not a violation of SOX act. Designated an auditor committee member who has no CPA license as a
final expert in their audit committee. ***CPA is not needed for Audit committee
SOX act applies to all publicly traded companies
PCAOB public company oversight board reporting
2. Cobit vs Coso (Coso Internal control ERM)
➔ Committee of sponsoring organizations:
o Bunch of non-for profit organization. Come up with frameworks and keep updating all
of it.
COSO=ERM
• ERM= Enterprise Risk Management
• FANG stocks: stocks if you bought within the past two years or so you made a fortune
o F: Facebook
o A: Amazon External audit control COSO 2013
o N: Netflix
o G: Google
Key words:
Fairly financial audit & internal controls audit
Certify CEO & CFO........................................................................204
3 Dimensions of Cubes (Pg. 204)
• ERM has strategic objective
o Risk assessment
o Risk response
o Control activities
Internal Control:
1. Managements philosophy, operating style, and risk appetite
2. Commitment to integrity, ethical values, and competence
3. Internal Control oversight board of directors
4. Organizational structure
5. Methods of assigning authority and responsibility
6. Human resource standards that attract, develop, and retain competent individuals
7. External influences
<2> Risk assessment & Risk response Risk
assessment
• Inherent Risk: Before IC
• Residual Risk: After IC
Impact X likelihood= expected
loss
• Benefit of IC= Inherent-residual do the benefits out way the costs
SYSTEMS FINAL EXAM
EXAM- 2027 100% CORRECT
SOLUTIONS
CHAPTER 7:
Overview of internal controls;
<1> Objectives & Limit actions
<2> Classification
<3> Cost vs Benefits
<1> Objectives & Limitations; 3 dimensions
1. Operation
a. Security: of assets
b. Efficiency: more cost oriented with employment of resources make sense with cost
c. Effective: getting done fast (prompt delivery)
2. Reliability of Reporting
i. Facebook think of data security
3. Compliance: with laws regulations and policies
Financial confirmatory for US GAAP (phrase that shows financial report)
Limitation: Financial reporting & Internal control
1. FRAUD: Very difficult to prevent even with segregation of duties
2. Human Error
3. Cost vs benefits
a. Need 1 more person to do the job
<2> Classification
a. Prevention vs Detection vs corrective
b. General controls vs business process vs application controls
- Detective controls log analysis
- Preventive controlsPhysical access control
- Corrective control emergency response team
<3> SOX (2002) – 5 requirements
1. Prohibit them (PCAOB) from performing certain audit services
2. Audit Committee Auditors auditor
3. Auditor had to be
a. 100% independent * management cannot be audit committee
b. At least one financial expert does not need CPA
c. Higher and fire external auditors: they are in charge of this
Which of the following is not important aspect of the Sarbanes-Oxley act?
➔ New rules for information system development
4. CEO & CFO certify SEC reporting
, 5. Sarbanes Oxley act SOX 404
Which is not a violation of SOX act. Designated an auditor committee member who has no CPA license as a
final expert in their audit committee. ***CPA is not needed for Audit committee
SOX act applies to all publicly traded companies
PCAOB public company oversight board reporting
2. Cobit vs Coso (Coso Internal control ERM)
➔ Committee of sponsoring organizations:
o Bunch of non-for profit organization. Come up with frameworks and keep updating all
of it.
COSO=ERM
• ERM= Enterprise Risk Management
• FANG stocks: stocks if you bought within the past two years or so you made a fortune
o F: Facebook
o A: Amazon External audit control COSO 2013
o N: Netflix
o G: Google
Key words:
Fairly financial audit & internal controls audit
Certify CEO & CFO........................................................................204
3 Dimensions of Cubes (Pg. 204)
• ERM has strategic objective
o Risk assessment
o Risk response
o Control activities
Internal Control:
1. Managements philosophy, operating style, and risk appetite
2. Commitment to integrity, ethical values, and competence
3. Internal Control oversight board of directors
4. Organizational structure
5. Methods of assigning authority and responsibility
6. Human resource standards that attract, develop, and retain competent individuals
7. External influences
<2> Risk assessment & Risk response Risk
assessment
• Inherent Risk: Before IC
• Residual Risk: After IC
Impact X likelihood= expected
loss
• Benefit of IC= Inherent-residual do the benefits out way the costs
