Internal Control

Internal Controls
05/06/2012

Internal Controls ar the methods and procedures designed by caution to safeguard assets and to manage resources. Its the system of rules of checks and balances. A system of intragroup overcome serves to minimize errors in the accounting records and to warn contrivance, embezzlement and theft by employees, customers and vendors. The system of intimate control provides reasonable assurance of the following: Reliable and operational monetary reports, efficient and effective operation, and budget along with encumbrance. Effective internal controls ar essential to assuring the accomplishments of goals and objectives. The two primary goals of internal controls ar to safeguard assets from theft and unauthorized use; and to stir the accuracy and reliability of accompany accounting records to avoid errors and irregularities in the accounting process.
The Sarbanes-Oxley Act of 2002 (SOX) has affected internal controls by forcing companies to pay back closer attention to internal controls. This act was put in place largely due to the corporate scandals in the past. SOX jaw more responsibilities on corporate executives and boards of directors to ensure that companies internal controls are reliable and effective (Ch.8, Internal Controls and Cash).



These controls continually must be verified to be working; outside auditors must in like manner agree that they are working as well. Companies that fail to trace are subject to fines, and company officers may be imprison (Ch.8, Internal Controls and Cash). A company that announces deficiencies in its internal controls would belike experience a fall in the price of its expect because investors would be uncertain that the companys financial statements are in order; and that their assets arent properly protected against fraud and theft. There are some limitations to internal controls; no company will be completely safeguarded from errors and fraud; some companies are subject to inventory theft, with or without...If you want to get a full essay, order it on our website: Orderessay



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