1. Internal control has one fundamental principle: Segregation of duties. Please briefly describe how a credit sale transaction could be separated into 4 different stages and assigned to 4 different departments (or groups of employees).
2. Please list five components of internal controls.
3. The professor shows that monthly bank cash reconciliation helps to detect cash fraud perpetrated by low-level employees. Please briefly explain how monthly bank cash reconciliation, an internal control practice, could be useful in identifying cash embezzlement.
4. What are "general controls" and what are "application controls"?
5. What is voucherand why it is useful in the recognition/bookkeeping of accounts payable?
6. What is cut-off bank statement? Why it is useful to auditor in cash audit? When cut-off bank statement is not available, what kind of alternative bank document an auditor can use to audit the cash reconciliation sheet?
7. What is cash disbursement journal? Why it is useful to auditor in cash audit?
8. How Parmalat committed accounting fraud before 2003? How much it cost Deloitte Italyto settle this accounting fraud case? What are the lessons you learn from this European audit failure?
9. Under the fair value accounting standard (ASC 820 or SFAS 167), investments can be classified into three different levels. Please briefly describe the differences among Level 1, Level 2, and Level 3 investments.
10. Pleaseidentify and describe important internal controls over the cash disbursement cycle. Key: 3 documents for A/P recognition, and check signing/mailing process.
11. Please identify and describe important internal controls over the cash receipt process. Who has the right to update A/R sub-ledger? The cashier or the controller or somebody else?
12. What is "cash equivalent"? When publicly traded firms buy and sell bitcoins, are they treated as "cash" or "marketable securities" or "intangible assets" for financial reporting purpose?
13. Client's cash balance per book and cash balance per bank are often different and this difference is mostly driven by timing difference and/or errors. Please list 4 factors/drivers which may create timing difference.
14. Professor Zhang introduced many well-known tax havens to you. Please list at least 4 tax havens here.
15. Professor Zhang mentioned Jersey Island as a tax haven. Is it an island close to the New Jersey state of America? Is it a haven commonly used by American multinational firms or rich families?