Sarbanes-Oxley Act

Topics: Auditing, Audit, Internal control Pages: 2 (652 words) Published: September 12, 2010

Sarbanes- Oxley Act Article Analysis

University of Phoenix

Sarbanes- Oxley Act Article Analysis
Internal controls mandated by the Sarbanes – Oxley act have proven to be a difficult hurdle for publicly held companies to comply with. (Barnes & Thornburg, 2004) The internal control requirements of the Sarbanes – Oxley act have laid the responsibility of internal audits, effectiveness and efficiency of internal auditing controls squarely on the shoulders of senior management, audit committees they employ and external auditors. The compliance responsibility includes certification and consent forms to be filed by all involved parties. The Sarbanes – Oxley internal control requirements have been “widely considered to be the most difficult, time-consuming, and expensive burden imposed the legislation..” (Barnes & Thornburg, p. 2) Internal controls over financial reporting include maintaining accurate records, providing assurance that transactions are recorded correctly, and assurance that a company’s prevention or detection of fraudulent activity is reported on financial statements. (Barnes & Thornburg, 2004) Companies are required to file statements regarding the “effectiveness of the company’s internal control over financial reporting.” (Barnes & Thornburg, p. 3) If a weakness is detected or identified in the internal control process a company must also report the information. Senior management is responsible for providing “reasonable assurance of the reliability of the company’s financial reporting.” (Barnes & Thornburg, 2004, p. 3) Senior management is responsible to oversee or create the internal controls of a company to ensure accurate financial reporting. Management must create annual reports divulging the company’s internal controls and any weaknesses identified. Management is required to report and disclose, on a quarterly basis, any information pertaining to internal control...
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