2020 CPA BEC REVIEW NOTES
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This document provides an overview of flash cards for the Business Environment and Concepts (BEC) section of the CPA exam. It is authored by CPAs and covers the five main areas of BEC through 400 slides with mnemonics, tips, and shortcuts. The flash cards address key topics like corporate governance provisions, enterprise risk management frameworks, and internal control objectives. Specific concepts defined include the roles of a financial expert on an audit committee, components of enterprise risk management, whistleblower compensation rules, anti-retaliation provisions, and types of internal controls. The full flash cards are available online and are designed for effective and fast exam preparation through repetition.
2020 CPA BEC REVIEW NOTES
- 1. 2020 - BEC FLASH CARD SAMPLE Prepared By SURYA PADHI | suryapadhicpa@gmail.com 1
- 2. BUSINESS ENVIRONMENT AND CONCEPTS COVERS EVERY TOPIC OF BEC in 5 Sections AUTHORED BY SUCCESSFUL CPAs BASED ON TRUSTED RESOURCES ALL OF THE NEED-TO-KNOW CONCEPTS AND EQUATIONS 2
- 3. BUSINESS ENVIRONMENT AND CONCEPTS AREA I : CORPORATE GOVERNANCE AREA II : ECONOMIC CONCEPTS AND ANALYSIS AREA III : FINANCIAL MANAGEMENT AREA IV : INFORMATION TECHNOLOGY AREA V : OPERATIONS MANAGEMENT 400 SLIDES WITH MNEMONICS AND TIPS SHORT CUTS WITH UP TO DATE TOPICS 3
- 4. AREA - I Corporate Governance Knowledge and use of internal control frameworks Knowledge and use of enterprise risk management frameworks Identifying key corporate governance provisions of regulatory frameworks and laws such as the Sarbanes-Oxley Act of 2002 4
- 5. Corporate Governance: Financial Expert- Public companies are required to have an audit committee, which must have a 'financial expert' who has: An understanding of GAAP and financial statements Experience in preparing or auditing financial statements Experience with internal auditing controls. 5
- 6. Component of Enterprise Risk management Component of Enterprise Risk Management are IS EAR AIM I - Internal Environment S - Setting Objective E- Event Identification A - Assessment of Risk R - Risk Response A - Activities I - Information and communication M - Monitoring 6
- 7. As per SOX Rule, whistleblowers will be compensated Usually a reward of 10 to 30% of the sanctions imposed. If you blew the whistle and the SEC imposed penalties of $1 million on the perpetrator, you would be awarded somewhere between $100k-$300k. If the sanctions imposed are $1 million or more, a bounty (reward) is mandatory. 7
- 8. What is Anti-Retaliation Provision? Protects whistleblowers from losing their job. It is illegal to punish a whistleblower to provides truthful information about any federal offense. 8
- 9. Controls; What is the Objective of internal control? To have effective and efficient operations, reliable financial reporting, and be compliant with laws and regulations. 9
- 10. What is Preventative Controls? Controls that prevent an error before it occurs 10
- 11. What is Detective Controls? Designed to detect an error after it has occurred 11
- 12. What is Corrective Controls? Controls meant to reverse the effects of an error 12
- 13. For full flash cards I wanted this system to be simple, effective, and fast so that you can succeed on your CPA Financial Accounting & Reporting test with a minimum amount of time spent preparing for it. Over time it is proven repetition helps memorize various terms and applying the terms in the examination. Visit http://cpa.suryapadhi.com/education/cpa-2020.html 13