Acc 544 Checklist For Evaluating Internal Control

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Checklist for Evaluating Internal Controls

ACC 544

CHECKLIST FOR EVALUATING INTERNAL CONTROLS
Introduction
“In response to the number of major corporate accounting scandals rocking the financial world (e.g., Enron, WorldCom, Xerox, KMart, etc.), on July 30, 2002, Congress passed the most wide-sweeping financial reporting legislation since the 1930s (when it established the Securities and Exchange Commission). The Sarbanes-Oxley Act is intended to strengthen corporate financial reporting by assessing stiffer criminal penalties for white-collar crimes, increasing management accountability, and enhancing auditor independence. The act is very specific about management 's responsibility for organizational internal control” (University of Phoenix, 2007, para. 6). According to the University of Phoenix Auditing and Assurance Services, Chapter Five, 2007, the auditor has two primary reasons for conducting an evaluation of a company 's internal control: (1) All publicly traded companies are required to have an audit of
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The control environment is the overall attitude, awareness, and actions of management regarding the internal control system and its importance to the business. Risk assessment and analysis promote awareness of issues by identifying internal and external risk factors and increase the achievement of company objectives. Control activities include both preventative controls used to avoid potential problems and detective controls, used to detect errors, fraud, and irregularities. Communicating the information from internal and external sources in a reliable, relevant, and timely manner is vital to the operation and control of a company. Monitoring is the last component and entails reviewing and assessing the internal control procedures to evaluate the design, execution, and effectiveness (UCOP,

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