Xacc 280 Week 8 Internal Controls Assignment
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Assignment: Internal Controls
XACC 280
Sarah Proia
Internal controls are the measures and methods a company takes to safeguard its assets and enhancing the accuracy and reliability of its accounting records. The internal controls is needed for safeguarding assets because of employee theft, robbery, and unauthorized use. Enhancing the accuracy and reliability of the accounting records is also important because of unintentional mistakes such as errors and also intentional mistakes such as irregularities and misrepresentations.
The Sarbanes-Oxley Act of 2002 is one of the most important laws that was passed in decades. This law forces companies to apply internal controls and pay more attention to them. There are a few groups of people that watch over companies and make sure that this law is being followed. First, executives and board of directors are required to make sure that companies are following internal controls. Next, companies must make sure that they have set principals of control over financial reporting. Also, a group was developed of independent outside auditors that evaluate the internal controls being practiced. Finally, the act created a group called the Public Company Accounting Oversight Board (PCAOB). The (PCAOB) was made to establish and create auditing standards and they regulate auditing activity being taken place.
If a company announces deficiencies in its internal controls they would experience a fall in the price of its stock because poor internal controls can cost company money even if theft is not a factor in the issue. If there is a deficiency in the company then something is not completely wholesome. This deficiency tells people that there is something fishy occurring in the company. This deficiency doesn’t necessarily mean thievery but it could mean that something is represented improperly or there could have been an inaccurate posting accidentally. Regardless of why there is a deficiency; this deficiency causes uncertainty in...
XACC 280
Sarah Proia
Internal controls are the measures and methods a company takes to safeguard its assets and enhancing the accuracy and reliability of its accounting records. The internal controls is needed for safeguarding assets because of employee theft, robbery, and unauthorized use. Enhancing the accuracy and reliability of the accounting records is also important because of unintentional mistakes such as errors and also intentional mistakes such as irregularities and misrepresentations.
The Sarbanes-Oxley Act of 2002 is one of the most important laws that was passed in decades. This law forces companies to apply internal controls and pay more attention to them. There are a few groups of people that watch over companies and make sure that this law is being followed. First, executives and board of directors are required to make sure that companies are following internal controls. Next, companies must make sure that they have set principals of control over financial reporting. Also, a group was developed of independent outside auditors that evaluate the internal controls being practiced. Finally, the act created a group called the Public Company Accounting Oversight Board (PCAOB). The (PCAOB) was made to establish and create auditing standards and they regulate auditing activity being taken place.
If a company announces deficiencies in its internal controls they would experience a fall in the price of its stock because poor internal controls can cost company money even if theft is not a factor in the issue. If there is a deficiency in the company then something is not completely wholesome. This deficiency tells people that there is something fishy occurring in the company. This deficiency doesn’t necessarily mean thievery but it could mean that something is represented improperly or there could have been an inaccurate posting accidentally. Regardless of why there is a deficiency; this deficiency causes uncertainty in...