Internal Controls
the A

question 27

Essay

Internal controls
The A. Gary Anderson Graduate School of Management (AGSM) at the University of California, Riverside periodically needs to hire part-time faculty for certain accounting and information systems courses. The department chair of Accounting and Information Systems identifies the courses each term, and sends an e-mail to professors at other local universities. Candidates respond to the e-mail, indicating which course(s) they are qualified and available to teach. AGSM department faculty evaluates each candidate and decides which candidates will teach which courses. At that point, AGSM's clerical staff requests the following information: resume, degree transcripts and student evaluations for the last year. Once those items are received, AGSM sends each part-time faculty member a hiring packet; the faculty member fills out the hiring packet, which includes various personnel, tax and payroll forms, and brings the completed packet to AGSM. The newly-hired faculty member is assigned an office and teaches the class as scheduled. AGSM staff process payroll once a month; faculty can have their salary deposited electronically in the bank or pick up a paper check on the first of the month.
Identify five risks for AGSM based on the preceding scenario. Suggest an internal control to address each risk, and indicate whether the internal control is primarily preventive, detective or corrective. Use the table below to record your responses.
$$\begin{array} { | l | l | l | } \hline \text { Risk } & \text { Control } & \text { Control type } \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline\end{array}$$

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Definitions:

Lymphocytes

A type of white blood cell involved in the immune response to protect the body against infections and other diseases.

Cholesterol

A waxy substance found in the blood, essential for building cells but high levels can lead to heart disease.

General Adaptation Syndrome

is a three-phase model that describes the body's physiological responses to stress: alarm, resistance, and exhaustion.

Alarm Reaction

The initial phase in the body's response to stress, involving the immediate activation of the nervous system.