Sec. 1
What is the control environment? What does it mainly focus on?
The control environment is the overall attitude toward rules and ethics. It focuses on honesty, responsibility, and how leaders set expectations.
What is risk assessment?
identifying possible problems before they happen
What are the 3 types of internal control system?
Preventive controls, detective controls and corrective controls
What are control activities? Give an example.
Control activities are rules and procedures to prevent mistakes. For example, one student collects money while another records it.
What is poor communication?
Employees are not told what to do
Why is monitoring important?
It makes sure everything is correct and rules are followed.
The control environment is referred to as the _________.
tone at the top
Why is recording information important?
It keeps track of what happened and helps prevent mistakes or confusion.
Why is separation of duties important when handling money?
It reduces mistakes and cheating because no single person controls everything.
What could happen if a business never checks employees’ work?
Mistakes may go unnoticed, and fraud or unfair actions could happen.
In a class, the teacher does not introduce rules or values at the beginning of the course. What problem could happen?
Confusion, poor behavior, problems like cheating, plagiarism, etc.
How is internal control environment important to a business? State at least 3 features.
Which elements of internal control system do you value the most if you were to start your own business?
as long as reasonable
In a classroom group project, how can at least two internal control elements be used? How are they similar to the actual company management?
as long as reasonable
A company has rules and procedures, but employees do not know about them. Which element is weak?
Information & Communication
How do the three elements—risk assessment, control activities, and monitoring work together?
Risk assessment identifies possible problems. Control activities are then employed to mitigate or minimize these risks. Monitoring ensures that these controls remain effective over time. They create a system that protects the business and ensures accuracy.