SOX were introduced to be known with its purpose. SOX is an act in protecting investors by improving the accuracy, and reliability of corporate disclosures made pursuant to the securities laws, and other purposes. New parts of the law are cited at 15 USC 7201. Many provisions is located at 78 USC because many of the provisions
A culture with strong ethical standards and code of conduct stemming from top management is key to preventing fraud; it is also cost-efficient to implement as a control. d. Audit Committee While not as cost-efficient as the other controls listed, there should be an audit committee appointed by the Board. It would be in charge of all financial oversight within the organization. For smaller organizations, they can attempt to recruit professional accountants to volunteer their time for the organization; in exchange, these accountants would be increasing their own reputation as well. Larger organizations might consider appointing an audit firm to audit their statements.
This is important to financial statements and documents because third parties often rely on this information and it is imperative that they are assured that the data is free from bias and inconsistency, deliberate or otherwise. Double Entry Accounting is a concept that requires all accounting transactions be recognized in two accounts as ether a credit or debit. With this method, all entries have two actions, one account is increased while the other is decreased. Double Entry Accounting is important to financial statements and documents because it allows the user to quickly check the accuracy of transactions because the total of accounts with credit balances should equal the total of accounts with credit balances (Elmblad, n.d.). This system is important to financial statement and
“Accounting as a Control and Monitoring Device. The government has recently sought public disclosure of such phenomena as management compensation, off-balance-sheet financing arrangements, and related party transactions.” (Weygandt, 2007). Explain the need for full disclosure in financial reporting. The need for the full disclosure in financial reporting is extremely high after the Enron case. The need is to avoid fraud, dishonesty, to be clear in what is happen on the financial statements.
Documentation is also important too because you need to keep records of any financial reports for the company for internal and external auditing that is done, it should kept on file as well on file in with the computer too for safety reasons. Independent internal verification would be put into place because you have to make sure that the data is correct for your business, and if anything is wrong it should be reported and corrected right away. Lastly I would want to bond my employees because I would want to make sure that my employees can be trusted to handle money and if any were to happen I everything would be covered for everyone involved. The way that my managers would use the financial information would be to determine how much salaries would be for employees as well as how much money would go into purchasing goods for the company too. All these things would determine how much revenue would come into the business and how much we lose as well.
Internal Cash Control University of Phoenix ACC 220 Internal Control Implementing a strong financial policy for your business is important in today’s turbulent economic world. Accounting internal controls assure that all transactions are authorized, all transactions are recorded, access to assets is allowed only for authorized purposes and accounting records describe only real assets. Internal control reviews can further help your company achieve its performance and profitability targets, prevent loss of resources, and promote more reliable financial reporting. With the passage of the Sarbanes-Oxley Act and related regulatory actions, companies are placing renewed emphasis on their internal audit functions. Reported incidents of fraud and abuse within companies are at an all-time high.
Lastly, we will summarize the information presented with a synopsis of what internal control measures are recommended. Ultimately, LBJ wants to go public in the future and to do so the company must have strong internal accounting controls in place and utilized. LJB Company: Internal Controls Report. Per LBJ’s request, this report has been created to provide your organization with the tools necessary to implement a solid internal control accounting procedure system. Internal controls are extremely important accounting practices that help ensure the safety of your business from fraud and clerical errors.
In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased the independence of the outside auditors who review the accuracy of corporate financial statements, and increased the oversight role of boards of directors. If LJB decides to issue stock, company should know how many shares should be authorized for sale and what value should be assigned to the stock. The next issue is internal control. Internal control consists of all the related methods and measures adopted within an organization to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations.
Large corporate spending on information technology has demanded that there be a quantifiable approach to view not only a return on the corporation’s investment, but also assurance the products and services the company is paying for are performing and producing as intended. Therefore, it is incumbent upon management to review the effectiveness of these controls. 4. The current-day situation of “world