Internal Controls

Internal Controls
By Jennifer Rash
November 7, 2010

Internal controls are an important aspect of any company.   The two primary goals of internal control are to protect the assets of an organization from any illegal use, such as robbery and the second goal is to make sure that the accounting records are accurate and to make sure that there are fewer mistakes.   The Sarbanes-Oakley Act of 2002 affected internal controls in a positive way.   Even though there are limitations of internal controls, if a company was to announce deficiencies in its internal controls, the company would more than likely experience a fall in its stock prices. There are four internal control principles and these four principles can be compared with each other.
Internal controls are a method that companies like to use and this allows them to spot any problems within the financial information.   The two primary goals of internal controls are important to ensuring that the assets and accounting records within the organization are taken care of.   The first goal of internal control is to protect the assets for the company.   This is an important goal because there is a lot of fraud going on in the business organizations and this goal helps to prevent things like employee theft.   The second goal of internal controls is to make sure that the accounting records are accurate and that there are fewer errors when dealing with the accounting process.   This is also an important goal because as humans, we are going to make mistakes and this goal will help ensure that there will be fewer errors and mistakes.   Both of these goals are important because they both would help to improve an organization.
The Sarbanes-Oakley Act of was enforced in 2002.   “Under the Sarbanes-Oxley Act, all publicly traded U.S. corporations are required to maintain an adequate system of internal control” (Weygandt, Kimmel, & Kieso, 2008).   This act is also called SOX and it was a very important law that was passed....