Ch 6 Problem Set B

Problem 6-3

Match the example or definition with the internal control component.

Letter	Example or Definitions	I/C Component
	External threats to the organizations success	a. Control Environment
	Reporting on actual and potential problems in the system.	b. Strategic Risks
	Information should move both up and down the chain of command.	c. Business Process Risks
	New employees are given a personnel policies manual upon hiring.	d. Information/Communication
	Tone at the top	e. Monitoring
	Internal threats to the organizations success
	Internal auditor group
	New competition
	Sarbanes-Oxley Act
	Logistics and distribution

Problem 6-4

Match the example or definition with the internal control activity or procedure.

Letter	Example or Definition	I/C Activity or Procedure
	Safes, vaults, and locked warehouses.	a. Authority/Responsibility
	The auditor compares bank deposit with cash register tape.	b. Segregation of duties
	Every cashier has their own cash drawer.	c. Documents/Records
	Checks are prenumbered.	d. Safeguards of Assets
	Separates record keeping from physical control of the asset.	e. Independent Verification
	Only the company comptroller signs checks
	Discrepancies are reported to management.
	Passwords, badges, retinal scans, cameras
	One person collects cash, another person gives customer their order.
	An un-numbered shipping document is destroyed but nobody knows it.