Chapter 8, Problem E8.16E

Understanding internal control, components, procedures, and laws
Learning Objectives 1, 2, 3

Match the following terms with their definitions.

1. Internal control	a. Two or more people working together to overcome internal controls.
2. Control procedures	b. Part of internal control that ensures resources are not wasted.
3. Firewalls	c. Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports.
4. Encryption	d. Should be prenumbered to prevent theft and inefficiency.
5. Environment	e. Limits access to a local network.
6. Information system	f. Example: The person who opens the bank statement should not also be the person who is reconciling cash.
7. Separation of duties	h. Examination of a company's financial statements and accounting system by a trained accounting professional.
8. Collusion	g. Identification of uncertainties that may arise due to a company's products, services, or operations.
9. Documents	i. Without a sufficient one of these, information cannot properly be gathered and summarized.
10. Audits	j. The organization plan and all the related measures that safeguard assets, encourage employees to follow company policies, promote operational efficiently, and ensure accurate and reliable accounting data.
11. Operational efficiency	k. Component of internal control that helps ensure business goals are achieved.
12. Risk assessment	l. Rearranges data by a mathematical process.
13. Sarbanes-Oxley Act	m. To establish an effective one, a company's CEO and top managers must behave honorably to set a good example for employees.