4.1.1/4.1.2 Internal & Cash Controls

​The Sarbanes-Oxley Act of 2002 was intended to meet which major objective?

• ​limit ownership of a corporation to U.S. citizens

• ​prevent corporate officers from investing in their own businesses

• ​prevent owners of an organization from committing stock fraud

• ​protect the assets of an organization for business use

​An employee who fails to comply with the processes and procedures describing how to complete a task is violating _____.

• monitoring

• control activities

• information and communication

​Why is rotating employees into different positions a good internal control procedure?

• ​because it saves money in training costs and in employee salaries

• ​because the organization can fill open positions more quickly

• ​because it allows people to spot instances of internal control noncompliance

• ​because the longer employees stay in one position, the less likely they are to comply with company policy

​The idea that a person who has custody of money or products should never be the person keeping records accounting for them is called _____.

• ​risk assessment

• ​assignment of responsibilities

• ​dual control

• ​separation of duties and approvals

Which of the following is an indication of a possible breach of asset security?

• One employee approves and makes payments.

• Check documents have been pre-numbered.

• Customers receive very few cash refunds.

• Payments to creditors are made quickly.

The separation of duties and approvals can be violated by resorting to _____.​

• ​dual control

• ​collusion

• assignment of responsibilities

• ​control activities

Which characteristic of cash makes it especially susceptible to theft and fraud?

• ​its popularity

• ​its portability

• ​its liquidity

• ​its accountability​

The person who collects cash and writes a receipt should not be the person who _____.

• ​supervises other cashiers

• ​makes the bank deposit

• ​writes the cash receipt

• ​enters cash receipts into the ledger

The most effective means of internal cash controls is _____.

• ​paying by electronic funds transfer

• ​writing checks in numerical sequence

• ​having two managers of accounts payable

• ​sending checks for verification

​Why is doing timely reconciliations a key part of internal control activities?

• ​It is part of Sarbanes-Oxley legislation.

• ​It is much easier to correct mistakes if they are caught early.

• ​Checks usually expire after two weeks.

• ​It ensures that accounts filed with the government are accurate.