Internal Control

Only available on StudyMode
  • Download(s) : 155
  • Published : April 5, 2013
Open Document
Text Preview
The definition I found to describe internal control is the process designed to ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Internal control is also responsible for making sure there is not any fraud in the business. Basically, to me this means that internal control is what keeps things flowing smoothly and correctly. There are two main goals of internal control. The first is to keep the company safe from any robberies, employee theft, and unauthorized use. The second goal of internal control is to enhance the accuracy and reliability of the accounting records. One of the most important principles of internal control is the establishment of responsibility. This means that only one person is responsible for one job. A second principle of internal control is to document all procedures correctly. The Sarbanes-Oxley Act of 2002 is known as SOX. The Sarbanes-Oxley Act was passed by Congress to make businesses and companies pay more attention to internal control so that these different frauds are not happening and keep happening. It gives the corporate executives and boards of directors more responsibilities to make sure the company’s internal control is reliable and effective. The law also requires them to create principles of control about their financial reporting. The corporate executives and boards of directors are also held responsible to continually make sure that these internal controls are running honestly and smoothly. It would not surprise me at all to learn that a company’s stock price would fall if their internal control had any sort of problems within it. It was reported that sixty percent of people feel more comfortable investing in a business or company if they abide by the laws laid out in the Sarbanes-Oxley Act of 2002. I am sure they feel more comfortable with the company using SOX because they know that the company checks into their internal control and makes sure...
tracking img