Accounting information system an overview 9e bodnar and hopwood 2015 chapter 07

Control and Accounting Information SystemsChapter 7... Learning Objectives• Explain basic control concepts and why computer control and security are important.. • Describe the four types

Control and Accounting Information Systems

Chapter 7

Learning Objectives

• Explain basic control concepts and why computer control and security are important.

• Compare and contrast the COBIT, COSO, and ERM control frameworks.

• Describe the major elements in the internal environment of a company.

• Describe the four types of control objectives that companies need to set.

• Describe the events that affect uncertainty and the techniques used to identify them.

• Explain how to assess and respond to risk using the Enterprise Risk Management model.

• Describe control activities commonly used in companies.

•Describe how to communicate information and monitor control processes in organizations.

Why Is Control Needed?

• Any potential adverse occurrence or unwanted event that could be injurious to either the accounting

information system or the organization is referred to

as a threat or an event.

• The potential dollar loss should a particular threat

become a reality is referred to as the exposure or impact of the threat.

• The probability that the threat will happen is the

A Primary Objective of an AIS

• Is to control the organization so the organization

can achieve its objectives

▫ Take a proactive approach to eliminating system threats.

▫ Detect, correct, and recover from threats when

they occur.

Internal Controls

that the following objectives are achieved:

▫ Safeguard assets

▫ Maintain sufficient records

▫ Provide accurate and reliable information

▫ Prepare financial reports according to established criteria

▫ Promote and improve operational efficiency

▫ Encourage adherence with management policies

▫ Comply with laws and regulations

Functions of Internal Controls

COBIT Framework

• Based on the following principles:

▫ Meeting stakeholder needs

▫ Covering the enterprise end-to-end

▫ Applying a single, integrated framework

▫ Enabling a holistic approach

▫ Separating governance from management

COBIT5 Separates Governance from

Management

Components of COSO Frameworks

Event Identification

Identifying incidents both external and internal to the organization that could affect the achievement

of the organizations objectives

Key Management Questions:

Control Activities

• Proper authorization of transactions and

activities

• Segregation of duties

• Safeguarding assets, records, and data

Segregation of Duties

security)

• Diagnostic control system

• Interactive control system

• Foreign Corrupt Practices Act (FCPA)

• Sarbanes-Oxley Act (SOX)

• Public Company Accounting Oversight Board (PCAOB)

• Control Objectives for Information and Related Technology (COBIT)

• Committee of Sponsoring Organizations (COSO)

• Internal control-integrated framework (IC)

• Enterprise Risk Management Integrated Framework (ERM)

Key Terms (continued)

Key Terms (continued)

• Data control group

• Steering committee

• Strategic master plan

• Project development plan