Financial Reporting

Topics: Internal control, Auditing, Audit Pages: 3 (746 words) Published: January 13, 2013
Financial Reporting
University of Phoenix
Nichol Gehrman
ACC 544

Over the years, more emphasis has been put on the internal controls of companies. This is due to many large company scandals and the misleading information presented to investors. Now there are financial reporting options set in place that are required by all publicly traded companies. Financial reporting is necessary to communicate a company’s financial position to the public. The options can be evaluated under established framework such as COSO or COBIT. Reporting Options

Sarbanes-Oxley Act of 2002 and accounting standard two require companies to submit three reports with the financial statements: 1. Auditor’s report on financial statements
2. Management’s report on the company’s internal controls 3. Auditor’s report on the company’s internal controls An auditor’s report provides the opinion of the auditor on whether the company has prepared and presented their financial statements in accordance with generally accepted accounting principles. The opinion given in this report is based on tests of controls and procedures that were performed during an audit. Management’s report includes statements of management’s responsibility for establishing and maintaining adequate internal controls, the framework used by management to assess internal control effectiveness and management’s opinion on the effectiveness. “The auditor’s report on internal control over financial reporting provides two types of assurances (or opinions) on a company’s internal control over financial reporting: (1) an opinion on management’s assessment of the effectiveness of internal control over financial reporting and (2) an opinion on the effectiveness of the company’s internal control over financial reporting” (Louwers et. al, 2007). Evaluation Criteria

The COSO framework and the control objectives for information and related technology are used to help auditors and management evaluate the internal...

References: (2003-2006). The COSO Financial Controls Framework: 2004 Version. Retrieved April 8, 2012 from
ISACA. (2011). COBIT framework for IT governance and control. Retrieved from
Louwers, T., Ramsay, R., Sinason, D., & Strawser, J. (2007). Auditing & assurance services: A look beneath the surface (2nd ed.). New York: McGraw-Hill/Irwin.
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