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Finance & Accounting
Pages 3 (753 words)
One of the most important business functions is accounting. Accounting deals with the recording, tracking, and monitoring of financial transactions. The end result of the accounting cycle is the preparation of financial statements. Due to the importance of accounting companies must implement internal controls in order to protect itself.
Today most organizations utilize computerized accounting systems. The employee that bares the responsibility over the design and functionality of the internal control system of a company is its comptroller. A good internal control system relies on the delegation of responsibilities to the different members of the accounting staff. Internal control systems must be constantly maintained. When designing an internal control system it is important to remember the accounting materialism principles which states that information is only useful if its benefits outweigh the costs. Training and development is often needed to educate the employees in internal control. Internal control measures are used to protect and monitor cash, account receivables, payroll, and inventory among other things. In 2002 the government of the United States passed the Sarbanes-Oxley Act (SOX). This act was a revolutionary legislation that was created to increase the confidence of investors in the stock market due to the fact that the marketplace had been flooded with accounting scandals such as Enron and WorldCom. One of the benefits of the Sarbanes-Oxley Act is that it increased the internal control requirements of public companies. ...
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