Skip to main content
Pearson+ LogoPearson+ Logo

Principles of Control Activities definitions Flashcards

Principles of Control Activities definitions
Control buttons has been changed to "navigation" mode.
1/15
  • Control Activities
    Procedures and policies forming the foundation of internal controls, designed to ensure company objectives are achieved and risks like fraud are minimized.
  • Internal Controls
    Systems and processes implemented to safeguard assets, ensure accuracy of records, and promote operational efficiency within an organization.
  • COSO Framework
    A widely recognized model outlining components and principles for designing and evaluating effective internal control systems.
  • Establishment of Responsibility
    Assignment of a specific task to a single individual, ensuring clear accountability and traceability for actions taken.
  • Separation of Duties
    Division of related tasks among multiple employees to reduce risk of errors or fraud by preventing one person from controlling all aspects.
  • Documentation Procedures
    Use of pre-numbered documents and systematic recordkeeping to ensure completeness, accuracy, and traceability of transactions.
  • Physical Controls
    Security measures such as locks, safes, and passwords that restrict unauthorized access to assets and sensitive information.
  • Independent Internal Verification
    Periodic or surprise reviews by separate personnel to confirm accuracy of records and detect irregularities or fraud.
  • Human Resource Controls
    Policies like bonding, mandatory vacations, and background checks aimed at hiring trustworthy staff and detecting or deterring fraud.
  • Bonding
    Insurance coverage for employees handling cash, providing financial protection against theft and incentivizing background checks.
  • Mandatory Vacations
    Required employee absences that help uncover fraudulent activities by allowing others to review their work in their absence.
  • Background Checks
    Pre-employment investigations into an individual's history to assess trustworthiness and reduce risk of hiring dishonest personnel.
  • Pre-numbered Documents
    Sequentially numbered forms used to track transactions, making it easier to identify missing or altered records.
  • Asset Safeguarding
    Protective measures designed to prevent loss, theft, or unauthorized use of company resources.
  • Internal Auditing
    Ongoing evaluation of internal processes and controls by designated personnel to ensure compliance and detect discrepancies.