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error
a mistake without intent to decieve
fraud triangle
the three elements necessary for every fraud
opportunity
the situation allows the fraud to occur
motivation
someone feels the need to commit fraud, such as the need for money
rationalization
justification for the deceptive act by the one comitting the fraud “I deserve it”
Internal controls
processes designed to reasonable assure a company can achieve objectives
4 components of internal control
control environment, risk assessment, control activities, monitoring
control environment
sets the overall ethical tone of the company with respect to internal control.
risk assessment
identifies and analyzes internal and external risk factors that could prevent a companies objectives from being achieved
control activities
the policies and procedures that help ensure that management’s directives are being carried out.
monitoring
continual monitoring of internal activities and reporting of deficiencies is required
preventive controls
separation of duties, physical controls, proper authorization, employee management, E-commerce control
detective controls
Bank reconciliations, performance reviews, audit logs
cash
currency, coins and balances in savings and checking accounts, as well as items acceptable for deposit in these accounts, such as checks received from customers
