Task Team of FUNDAMENTAL ACCOUNTING School of Business Sun Yat-sen University Lesson note Lesson 12 Internal Controls and business ethics Learning objectives 1. Explain the fundamental principles of internal control 2. Define, explain the purpose, and identify the principles of internal accounting control 3. Apply internal control to cash 4. Explain and record petty cash fund transactions 5.Identify control features 6. Prepare a bank reconciliation. Explain the fundamental principles of internal control Teaching hours Students major in accounting: 4 hours Others. 2 hours Teaching content China Aviation Oil (Singapore)Corp, an overseas arm of China's main jet-fuel supplier revealed the end of 2004 that it has racked up about $550 million in trading-related losses 2. Define internal control Internal control is the organizational plan and all the related measures that an entity adopts (2) Encourage adherence to company policies (3)Promote operational efficiency, and (4)Ensure accurate and reliable accounting records Management has primary responsibility for the financial statements. Exhibit 7-1 is an excerpt from the Responsibility for Consolidated Financial Statements of Lands'End 3. Identify the characteristics of an efective system of internal control (1)Competent, reliable, and ethical personnel-Attract top-quality employees, train them well,Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University Lesson notes Lesson 12: Internal Controls and Business Ethics Learning objectives 1.Explain the fundamental principles of internal control. 2.Define, explain the purpose, and identify the principles of internal accounting control. 3.Apply internal control to cash. 4.Explain and record petty cash fund transactions. 5.Identify control features. 6.Prepare a bank reconciliation7.Explain the fundamental principles of internal control. Teaching hours Students major in accounting: 4 hours Others: 2 hours Teaching contents: 1. Opening story China Aviation Oil (Singapore) Corp., an overseas arm of China's main jet-fuel supplier, revealed the end of 2004 that it has racked up about $550 million in trading-related losses. 2. Define internal control Internal control is the organizational plan and all the related measures that an entity adopts to (1) Safeguard assets, (2) Encourage adherence to company policies, (3) Promote operational efficiency, and (4) Ensure accurate and reliable accounting records. Management has primary responsibility for the financial statements. Exhibit 7-1 is an excerpt from the Responsibility for Consolidated Financial Statements of Lands’ End. ERM 3. Identify the characteristics of an effective system of internal control (1)Competent, reliable, and ethical personnel—Attract top-quality employees, train them well