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  1. Difference between management and administration
  2. List 3 accounting errors and explain
  3. Measures to prevent accounting fraud

MANAGEMENT: Is the act or function of putting into practice the policies and plans decided upon by the    administration.

ADMINISTRATION: is a determinative function, while management is an executive function

ADMINISTRATION: makes the important decisions of an enterprise in its, whereas management makes the decisions within the confines of the framework, which is set up by the administration.

ADMINISTRATION: Are mainly found in government, military, religious and educational organizations. MANAGEMENT on the other hand, is used by business enterprises.

Administration is the top level, whereas management is a middle level activity

-Internal control

-surprise check

-Independent third party audit

-code of conduct

-Monitoring and evaluation

-Separation of duties

-reconciling to the parties

  1. Segregation of duties/ appropriate segregation of functional responsibilities and duties

Requires that different individuals be assigned responsibility for different elements of related activities, particularly those involving authorization, custody, or recordkeeping. For example, the same person who is responsible for an asset’s recordkeeping should not be responsible for physical control of that asset. Having different individuals perform these functions creates a system of checks and balances.

  1. Proper authorization/ proper authorization of transactions of transactions and activitiesHelps ensure that all company activities adhere to established guide lines unless responsible managers authorize another course of action. For example, a fixed price list may serve as an official authorization of price for a large sales staff. In addition, there may be a control to allow a sales manager to authorize reason able deviations from the price list.
  2. Adequate documents and records/ adequate documents and records

Provide evidence that financial statements are accurate. Controls designed to ensure adequate recordkeeping include the creation of invoices and other documents that are easy to use and sufficiently informative; the use of prenumbered, consecutive documents; and the timely preparation of documents.

  1. Physical control over assets and records

Helps protect the company’s assets. These control activities may include electronic or mechanical controls (such as a safe, employee ID cards, fences, cash registers, fireproof files, and locks) or computer-related controls dealing with access privileges or established backup and recovery procedures.

  1. Independent checkson performance

Internal controls over cash must be effective to prevent theft. A company’s department heads and segment chiefs implement internal controls and procedures in cash management systems to prevent theft or fraud. Effective procedures also help a firm report accurate cash amounts in financial statements.

  1. Types of internal audit

1) Financial Review: To provide reasonable on the correctness, entirety, legitimacy, and regularity of financial reports and transactions as well as the soundness of underlying internal controls and accounting records.

2) Compliance Audit: To verify adherence to laws, regulations, policies, standards, and prescribed procedures.

3) Performance Audit: To assess the degree of economy, effectiveness and efficiency of the entity’s operations. The emphasis is put on the assessment of both entity’s inputs and outputs.

4) Systems Audit: To evaluate the design and operation of systems including internal control, financial controls, accounting systems, IT Systems, etc.

5) Forensic Audit: To consider specific cases of suspected irregularities such as fraud, theft, embezzlement, or mismanagement of public funds.

6) IT Audits – Reviews of computer-based systems focusing on data security, disaster recovery, and effective use of resources.

-Performance audit: working hour/time management/fulfillment/accomplishment of duties and responsibilities

-compliance audit: how work they comply with duties, regulations procedures’

-Forensic audit: it is an audit done/conducting for specific purpose/objective.

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