Attached are the assignment i am requesting to have done
Using the following flow chart relating to Revenues to assist you. The questions below relate to the Expenditure Accounting Cycle. Tell me two things about each action listed. I want to know 1. Is the action an act of Identifying, Capturing, Classifying, Recording, Reconciling or Reporting AND 2. Is the item of action an example of a policy, a process/practice or a system? Example #1: Ask the Executive Director who initiates purchases. Answer: Identifying and a Process. Example #2: Input invoices into Quickbooks. Answer: Recording and a System. It is possible that there are multiple correct answers for any one question. For example, the inputting of invoices is also a process, but it uses a system. While the best answer is system, I will not mark you off for saying system, but I will note the best answer is system. 1. Print an outstanding invoice list out of Quickbooks for the Executive Director. 2. Check the statement from a vendor and match it to the outstanding invoices in the system. 3. Prepare a list of all disbursements for the board of directors to review at their board meeting. 4. "All disbursements must be reviewed and approved by the Board of Directors at the first following board meeting." 5. Ask the prior accounts payable clerk about the receipt of invoices and flow of information. 6. Print checks out of the Quickbooks system. 7. Sit down with the programs director so that he can tell you which expenses belong to which program each month. 8. Note on each invoice which program the expense is related to, so it can be input that way into the system. 9. Input the invoice into the right account and program category in the Quickbooks system. 10. Print 1099s at the end of the year. (Tax reports for vendors receiving >$600 per year who provide services and are not corporations). Homework #7 This homework is on Internal Control. The homework references examples that were made up already. It is in referenced to the attached reading about Internal Controls, the homework references examples made in the reading. Internal Controls: 1. We establish an internal control structure, causing the establishment of policies, procedures, accounting systems and controls to assist us in fulfilling our mission, and comply with the duties of office. There are 4 basic reasons, name them and give a brief description of what it means. 2. The COSO Framework includes 5 primary components. Name them and give an example of what each might look like as far as an action or activity that would be included in that component. 3. The 6 control activities that are put in place within any accounting cycle. Name them and give three more examples for each that are examples I have not given. 7 – Internal Controls Internal controls are part of the accounting system. They are controls that underlie all the processes, procedures and structures of the organization, so the duties of the board of directors to the organization are honored and the policies established are fulfilled, to ensure: · The safeguarding of assets, · Increase operating efficiency · Enhance the reliability of records · Ensure compliance with laws, regulations and contractual agreements COSO Internal Control Framework The Committee of Sponsoring Organization (COSO) developed and published the “Internal Control Integrated Framework”. This is an internal control framework that is widely adopted within the U.S. This framework is an integrated guide for designing, implementing, and evaluating internal control. Components of Internal Control The COSO Internal Control Framework includes five primary components of internal control: 1. The control environment 2. Risk Assessment 3. Control Activities 4. Information and Communication 5. Monitoring The COSO framework also identifies 17 principles related to the components of internal controls. Below are the components detailed, along with the individual principles that relate to each component. The control environment itself is the that part of the accounting and other systems (sets of policies, processes and systems/structures) that provide the basis for carrying out internal control throughout the organization. The board of directors are responsible for the establishment of internal controls, as a part of their duties to the organization. The board of directors also sets the “tone at the top” for the organization. They, along with management, set the stage regarding the importance of internal controls and standards of conduct. Their expectations and examples of behavior create the space for which all others operate. The rigor of integrity and upholding of ethical values of the whole is established from the top down. The control environment is comprised of five distinct principles. 1. Demonstrates a commitment to integrity and ethical values. The organization demonstrates a commitment to integrity and ethical values through their policies, actions and communications. 2. Exercises oversight responsibly. The board of directors is independent from management in appearance and fact, and exercises oversight of the development, implementation and monitoring of the performance of internal controls. 3. Establishes structure, authority and responsibility. Under board oversight, management establishes the processes, systems/structures, communication practices and the assignment of responsibilities and designation of authority. 4. Demonstrates commitment to competence. The organization ensures that tasks are performed with the appropriate level of competence and employees and volunteers are sufficiently trained and developed to perform the tasks for which they are responsible. 5. Enforces accountability. Those responsible for internal control activities are held accountable for the performance of the system. Risk Assessment, as we have discussed in the previous chapter, is the process of identifying and assessing risks that the organization faces. We defined risk as the potential threat against a desired outcome. The process of risk management is a continual and dynamic process, that is constantly identifying, assessing, developing responses to, implementing processes and systems/structures, and monitoring performance of risk response. Internal controls include all of that, and the risk assessment step is an imperative aspect. The risk control component of the internal control framework is composed of 4 distinct principles. 1. Suitable objectives are specified. The board establishes the organizational objectives through strategic planning and policy. 2. Risk is identified and analyzed/assessed. The organization sets in place a procedures and individuals tasked with the procedure of identifying and responding to risks against the organizational objectives and duties of which the board of directors is charged. 3. Fraud risk is analyzed/assessed. The organization additionally addresses risks of fraud; whether through misappropriation of assets or the intentional misrepresentation of information. 4. Significant changes are identified and analyzed/assessed. Management and the board are present to and responsive of significant changes in the operating environment, actions of, or results of the organization or it’s people. Control Activities are the procedures that are established to respond to the risks faced by an organization and to support the achievement of objectives. Control activities are performed across all levels of the organization, throughout all processes (including the Accounting practice), and over the entire life of the organization. Control activities include manual and automated activities and may be preventative or detective in nature. · Selects and develops control activities. The board of directors and management develop control procedures that address policies, risk response and support achievement of objectives. · Selects sand develops general controls over technology. Management develops general control procedures over technology to support the control those procedures, where applicable. · Deploys through policy and procedure. The board enacts policies establishing expectations and the procedures to fulfill on them. Management implements the procedures. Further discussion on how these control activities express themselves on the accounting cycle is in the next section, Control Activities as Applied to the Accounting Cycles. Communication and Information are the processes by which we disseminate information. Communication can be initiated within the organization and stay within the organization or it can be initiated outside and enter at any level. In reverse, it may initiate within and travel without. Communication can be initiated at any point in the organization. It travels downward in the responsibility hierarchy from the board of directors to the executive director and executive management, organizational management and staff and volunteers. It also travels upward from the volunteers and staff to the executive team and upward to the board. Communication also travels laterally across the organization. Communication can be in the form of written language, such as in policies and procedures, letters, memos and reports. It can be spoken, during meetings or informally through correction or acknowledgement. Inquiry is a part of communication, as are directives. Lines of communication are generally established by the board of directors and management of the organization. Open communication structures are facilitated to prevent restrictions of communication that may be of relevance and importance. Documentation of communication is an important facet of the information and communication component of internal control. Documentation of written and spoken communication include digital communications. Records retention is governed by specific requirements stipulated by law. The three principles related to information and communication are: 1. Uses relevant information. We live in an information rich society, and internal control design takes into account that relevance is an important distinction as to the information collected, used and retained. 2. Communicates internally. Organizations must have structures for internal communications in order to facilitate effective and relevant communications, which disseminate the information and communications required to meet objectives. 3. Communicates externally. Organizations also must have structures for external communications, both in the delivery and reception of information and communications. Information collection, use and dissemination externally are also imperative for meeting the organizational objectives. The Monitoring activities established to continually evaluate the effectiveness of the above components of internal control are designed to ensure that the controls established to respond to risk and to support the achievement of objectives. Some may be embedded in the processes at different levels of the entity and others may be independently performed by risk management, the board of directors, or outside parties, such as auditors. The two principles of monitoring are: 1. Conducts ongoing and/or separate evaluations. Evaluations results are the source of improvements to systems. 2. Evaluates and communicates deficiencies. Communication to those who make policy and design systems are needed to ensure that adjustments to elevate systems are made. Control Activities as applied to the Accounting Cycles Accounting practices, as discussed in prior chapters are carried out in cycles. To review, the illustration below shows a cycle that, generally speaking, would be applicable to any accounting cycle, including: · Revenue Cycle – Related