Internal Controls - Assignment Example

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Internal Controls

The Sarbanes-Oxley Act of 2002 was passed generally for the purpose of restoring investor trust and confidence. The demand of the government, investors and the American public sought a standard and guarantee on the accuracy of financial reports. So, Section 404 of the mentioned law was strictly devoted in requiring management to assess and report on the effectiveness of internal control over financial reporting or ICFR. Bergen (2005) reported that “the concerns through making executive more responsible for company accounting statements, redefining the relationships between corporations and their auditors, and restructuring the internal audit systems of public corporations.” Section 404 of Sarbanes-Oxley Act of 2002 has also been experiencing issues regarding its implementation. The legislation of the law “has been subject to furious debate amongst corporations, auditors, regulators and others.” The internal control policy has cause extremely high costs especially for smaller companies and early results left the benefits unclear. A number of academic and professional researches have grown to support the lack of transparency in accounting and corporate governance is growing larger. ...Show more

Summary

Internal Controls Internal control is an integral part of any business which acts as a form of feedback that looks at the equality and functionality of different aspects of a business. It is defined as the process designed to provide reasonable assurance regarding the achievement of its two main goals namely, to safeguard the assets of the company from robbery and unauthorized use and to provide financial and accounting information with high integrity…
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