Literature Review - After so many high-profile corporate collapses, both government and business has emphasized again the use of internal controls to fight fraud which is one of the white collar crimes being committed in greater amounts and more frequency (Lindgren 1). Fraud is a deception carried out to make unlawful gains and todays fast-paced computerized world often makes detection very difficult. At any rate, the purpose of good internal controls is to prevent fraud from being committed in the first place by making its commission difficult and secondly, internal controls should be able to catch fraud sooner rather than later. When all the internal controls are properly implemented and enforced, detection is easily a matter of time. Specifically with regards to accounting and auditing, internal controls should achieve three things; namely: protecting an organizations assets and properties (both the tangible and intangible), make sure business information (especially financial data) is timely and accurate, and lastly, the company is in compliance with reportorial requirements, laws and regulations.
The last objective, which is compliance, acquired greater significance in view of the passage of important legislation such as the Foreign Corrupt Practices Act (1977) and equally important Sarbanes-Oxley Act (2002). The Committee of Sponsoring Organizations or COSO stepped in to provide crucial guidelines when it comes to fraud, internal controls and financial reporting. Internal controls are five critical components like general corporate environment, risk assessment, information and communications, control activities and monitoring functions (Arens, Elder & Beasley, 321) that in turn impact on its corporate governance, enterprise risk management, business ethics, fraud, internal operational controls and financial reporting.
The report therefore pertains to the five