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bank reconciliation
internal financial report that explains and documents any differences that may exist between a balance within a checking account and the company’s records
bank service fee
fee often charged by a bank each month for management of the bank account
chief executive officer (CEO)
executive within a company with the highest ranking title who has the overall responsibility for the management of a company; reports to the board of directors
chief financial officer (CFO)
corporation officer who reports to the CEO and oversees all of the accounting and finance concerns of a company
private cooperation or agreement, between more than one person, primarily for a deceitful, illegal, or immoral cause or purpose
Committee of Sponsoring Organizations (COSO)
independent, private-sector group whose five sponsoring organizations periodically identify and address specific accounting issues or projects related to internal controls
control lapse
when there is a deviation from standard control protocol that leads to a failure in the internal control and/or fraud prevention processes or systems
cooking the books
(also, financial statement fraud) financial statements are used to conceal the actual financial condition of a company or to hide specific transactions that may be illegal
practice of protecting software, hardware, and data from digital attacks
deposit in transit
deposit that was made by the business and recorded on its books but has not yet been recorded by the bank
external auditor
generally works for an outside CPA firm or his or her own private practice and conducts audits and other assignments, such as reviews
financial statement fraud
using financial statements to conceal the actual financial condition of a company or to hide specific transactions that may be illegal
act of intentionally deceiving a person or organization or misrepresenting a relationship in order to secure some type of benefit, either financial or nonfinancial
fraud triangle
concept explaining the reasoning behind a person’s decision to commit fraud; the three elements are perceived opportunity, rationalization, and incentive
imprest account
account that is only debited when the account is established or the total ending balance is increased
internal auditor
employee of an organization whose job is to provide an independent and objective evaluation of the company’s accounting and operational activities
internal control system
sum of all internal controls and policies within an organization that protect assets and data
internal controls
systems used by an organization to manage risk and diminish the occurrence of fraud, consisting of the control environment, the accounting system, and control activities
nonsufficient funds (NSF) check
check written for an amount that is greater than the balance in the checking account
outstanding check
check that was written and deducted from the financial records of the company but has not been cashed by the recipient, so the amount has not been removed from the bank account
petty cash fund
amount of cash held on hand to be used to make payments for small day-to-day purchases
Public Company Accounting Oversight Board (PCAOB)
organization created under the Sarbanes-Oxley Act to regulate conflict, control disclosures, and set sanction guidelines for any violation of regulation
publicly traded company
company whose stock is traded (bought and sold) on an organized stock exchange
revenue recognition
accounting for revenue when the company has met its obligation on a contract
Sarbanes-Oxley Act (SOX)
federal law that regulates business practices; intended to protect investors by enhancing the accuracy and reliability of corporate financial statements and disclosures through governance guidelines including sanctions for criminal conduct
special purpose entities
separate, often complicated legal entities that are often used to absorb risk for a corporation
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