Internal Controls

Internal controls
Axia college
By: Dennis Seilhamer

Internal controls

Internal controls are referred to as a system of checks and balances. It is the methods and procedures that management came up with to safeguard assets and to manage resources. An internal control system was designed to detour fraud, employee, customer, and vendor thefts, and minimize errors in the accounting records. A system of internal control provides a company with the assurance that they will have; Reliable financial and operational reports, efficient and effective operations, and compliance with acceptable state and federal laws, regulations, and university policies and procedures. It also is how a company can protect its resources against waste and inefficiencies. Department heads of a company should be setting the “tone at the top” of their departments control environment, assuring that adequate controls are put in place and that accurate financial numbers can be reviewed.
Sarbanes-Oxley, commonly referred to as SOX, was a law enacted as a response to the massive accounting frauds perpetuated by major corporations in the early 2000s. Congress wished to avoid another Enron or WorldCom. By mandating highly stringent and voluminous procedures throughout an organization, however, complying with SOX has also become very expensive and burdensome.   The federal law enacted by Congress in response to massive corporate and accounting fraud in the early 2000s. Investors from major corporations such as Enron, Tyco, Adelphia and WorldCom lost heavily due to deceptive and highly inaccurate financial statements. The loss of billions of dollars in shareholder wealth shook investor confidence in the U.S. financial markets. In an effort to shore up confidence from the capital markets, the legislation aim, institutionalizing management, financial and accounting controls at U.S. publicity trade companies. (Marv Dumon) Among the key provisions that require implementation is:...