Xacc280 Week 8assignment

Xacc280 Week 8assignment

  • Submitted By: Twhit
  • Date Submitted: 04/28/2013 4:56 PM
  • Category: Business
  • Words: 793
  • Page: 4
  • Views: 161

Internal controls are a certain system that includes actions and methods with focusing on the organization’s security and to protect the organizations assets and keep the accounting process trustworthy (Weygandt, Kimmel, Kieso, 2008). Protecting a company’s assets is very necessary because of the danger resulting from robberies or even employee theft. To be able to work on or to improve or keeping the accounting process and records correct is an important item and also because of the risk of having mistakes and inaccuracy.
Before 2002, many companies were trying to determine their own systems of internal control that could vary in intensiveness and sufficiency. But after a few wide scandals like at Enron or Tyco coming to the public eye, which involved deceitful and highly dishonest accounting practices, the government passed Sarbanes-Oxley Act of 2002 (SOX). This requires organizations and businesses to follow and maintain a satisfactory internal control at a certain standard. After this was established the Public Company Accounting Oversight Board was established. The Public Company Accounting Board works on creating certain standards for auditors and regulates their activities. Now according to Weygandt, Kimmel, & Kieso (2008), and their motto ‘Better get those controls under control’. This was one of the most important laws passed in decades. The main effect on internal controls was obligating top corporate executives and directors to ensure their proper functions and determine their efficiency. From one side, each organization is required to have a strong and valid internal control for financial reporting, periodically verifying that it functions properly. Overall, the SOX Act improved the situation regarding fears of investing in stocks, bringing about noticeable and positive change. Therefore the more people believe they are more secured investing in stocks than previously. Weygandt, Kimmel, & Kieso (2008) stated that about sixty percent of investors...

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