Essay on Internal Controls

1166 Words Apr 16th, 2012 5 Pages

Internal Controls
Jared Johnson
University of Phoenix

Internal Controls

In order for a company to survive and be profitable there need to be a plan in place to safe guard their finances. These plans fall under an umbrella term known as the internal controls of a company. It doesn’t matter if these companies are huge corporations with thousands of employees or small one store operations with a half a dozen employees, or if they are public or private. There need to be some sort of controls in place to protect the company and it’s employees. This brings us to the two primary goals of internal controls, they are; (1)To safeguard its assets. By doing this the company can protect itself from someone who
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The Sarbanes-Oxley Act of 2002 mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud. Finally in 2010 the Dodd-Frank Wall Street Reform and Consumer Protection Act this legislation set out to reshape the U.S. regulatory system in a number of areas including consumer protection, trading restrictions, credit ratings, regulation of financial products, corporate governance and disclosure, and transparency(A). It is interesting to note that these measures were enacted within a few years after a financial crisis or corporate wrong doing.
The Sarbanes-Oxley Act of 2002 has changed internal controls in many ways. It created new standards for corporate accountability as well as new penalties for acts of wrongdoing. It changes how corporate boards and executives must interact with each other and with corporate auditors. It removes the defense of "I wasn't aware of financial issues" from CEOs and CFOs, holding them accountable for the accuracy of financial statements. The Act specifies new financial reporting responsibilities, including adherence to new internal controls and procedures designed to ensure the validity of their financial records. It also requires all financial reports to include an internal control report. This is designed to show that not only are the company's financial data accurate, but the company has confidence in them because adequate controls are in

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