Knowledge Check - Internal Controls
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1. All of the following are basic elements of an internal control system EXCEPT:
A. Organizational budget detailing all of the expenditures for the year.
B. Hiring policies to ensure that financial staff qualifications align with job responsibilities.
C. Written position descriptions describing the responsibilities of those employees who have a relationship to the financial and accounting issues.
D. Accounting manual and a chart of accounts that includes a list of account names and the numbers assigned to each of the accounts.
2. What element of internal controls is meant to make sure that no single person can defraud the organization?
A. Policies and procedures
B. Segregation of duties
C. Controlled access to records
D. Reconciliation of budgets and records
E. Cash Controls
3. How often do you think you should update your organizational chart?
A. Every six (6) months
B. Once a year
C. As often as changes are made
D. When the executive leadership of your organization changes
4. Internal controls are to your organization as:
A. Checks and balances are to the three branches of government
B. Policies about asking the front desk of the hotel for an extended check-out time are to a hotel guest
C. Getting permission from Mom and Dad and a friend’s parents before going out with friends on a Friday night are to a teenager who is living at home
D. A and C
E. None of the above
5. One difference between internal controls and accounting controls is that internal controls:
A. Pertain to the budget; accounting controls identify the source and application of Federal funds.
B. Outline procurement procedures; accounting controls allow an organization to maintain oversight and control of assets.
C. Verify that the organization is functioning properly; accounting controls track Federal funds.
D. Allow oversight and control of cash, property, and assets; accounting controls identify the source and application of Federal funds.
6. Tony, an Accounts Payable Clerk with a State Housing Authority, received an invoice from a sub-recipient organization working on the State’s rental housing program. Tony looked up the sub-recipient in the chart of accounts and confirmed that they had indeed been asked to do the work reflected on the invoice. He proceeded to cut and sign a check and mail to the sub-recipient organization.
Tony followed good internal control practices.
7. Procedures for storing source documentation, such as financial records of rental assistance, in locked file cabinets with limited access are part of internal controls that implement client confidentiality requirements.