GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements. Companies are expected to follow GAAP rules when reporting their financial data via financial statements. If a financial statement is not prepared using GAAP principles, be very wary! Therefore, you still need to be careful and review other financial reports which can be altered. Convergence means that the U.S. Financial Accounting Standards Board (FASB) and the Independent Accounting Standard-setting Body (IASB) would continue working together to develop high quality, compatible accounting standards over time.
Mr. President, everyone at LJB needs to understand the definition of internal control and what is required of them under the SOX law since this law requires a combined effort from top management and employees alike. Internal control “consists of all the related methods and measures adopted within an organization to safeguard its assets, enhance the accuracy and reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations” (Kimmel, Weygandt & Kieso, 2009, pp. 327-328). In other words, effective internal control can help companies achieve established financial goals, prevent loss of resources, and prepare reliable financial statements. Under SOX, all publicly traded U.S corporations are required to maintain an adequate system of internal control by means of developing principles of control over financial reporting as well as continually verifying that these controls are working.
In fact much of these systems were developed so that the businesses that are now operating as organizations could expand under the stewardship of an increasing number of merchants and executives while maintaining the highest level accountability by providing records that prove or disprove the integrity of those trusted to run business by those that own them. These systems permit the functionality of international commerce and financial management of large scale business. In order to run a company, executives must be able to be informed of the components that make up the corporation and how they are interacting. Modern accounting systems have provided the ability to do so with the versatility that allows a business to run as a corporation. Accounting has developed to the point where it has allowed organizations to grow into much larger, efficient businesses that can generate more revenue in a shorter period of time.
Running head: JUSTIFICATION FOR AN INTERNAL CONTROL SYSTEM Justification of an Internal Control System Jen Russell University of Phoenix Justification of an Internal Control System A company with established internal controls will be successful in conducting business practices and company’s put internal controls in place to respond to changes in the company and environment. Internal controls are used for risk reduction, to mitigate risks whereas portfolio, hedging and insurance are methods of sharing risks (Risk Evaluation, 2010). Not only must a company have internal controls established but a company must also have insurance to protect the company from significant losses. Internal Controls Internal controls are systematic measure implemented by an organization to 1) conduct business in an orderly and efficient manner, 2) safeguard assets and resources, 3) deter and detect errors, fraud and theft, 4) ensure accuracy and completeness of accounting data, 5) produce reliable and timely management and financial information, and 6) ensure adherence to policies and plans (Internal Control, 2010). Internal controls are not only used for risk management but are also used to control accounting, such as budgets as well as qualitative and quantitative controls.
The board of directors is responsible for overseeing and exercising corporate powers and certifying the company’s business affairs while managing the goals and objectives for long-term interests of the shareholders. Organizational Annual Report and SEC Filing The SEC requires publically traded companies to file annual financial reports, and these reports are open to the public. Investors are interested in these reports because it helps in determining the financial health of a company. As a means for providing guidelines, principles, and objectives for the financial markets in the United States, the Sarbanes-Oxley Act of 2002 enhances the SEC’s roles for reforming corporate accountability. This also includes establishing a private-sector regulator to oversee the auditing profession to combat accounting fraud, and enhancing financial disclosures.
The company’s objectives include continuing to secure sustainable growth through acquisitions and then attain successful integration of those acquisitions. In addition executive management seeks to improve the company’s business activities by implementing infrastructure improvements, improve the quality of customer service, and lower operating costs. Although these objectives are of significant importance the executive managers also recognize the need to implement financial strategies to reduce risk and to implement a strategic growth management plan. Functional Tactics Functional tactics are derived from the company’s business strategy
Though ratio analysis should not be used alone as there are several limitations in the usefulness of their data, they will give general historical information. Managerial decision-making should consider all factors in leveraging their position within their specific industry to excel and continue to generate positive revenue. Financial statements are the driving forces behind understandings a company’s financial position in the market place. Financial statements can effectively communicate what financial decisions have been made, how the bottom line was affected and what are the necessary steps to keep a company in business. Financial statements give the relative fiscal health over a period through interpretation; by identifying corporate strength and effectively examining overall managerial decision-making through ratio analysis.
PMOs can provide the structure needed to both standardize Project Management practices and improve Project Portfolio Management. A PMO can help your organization determine methodologies for repeatable processes. In the United States, The Sarbanes-Oxley Act has been a huge driver for the development of PMOs. The Act requires companies to disclose investments that may affect a company's operating performance. Many large projects fall under that definition.
BURGLARY INSURANCE What is Burglary Insurance? Each and very successful business endeavor by you, whether it be a medium-sized enterprise or a retail store selling a variety of products, needs to be protected against unlawful and unforeseen incidents, such as that of burglary. Such incidents can hamper your growth plans through potential loss and creates significant financial drain. A proper burglary insurance policy can help you in dealing with such issues. Since you are granted firm control over your plans for your financial growth, you can dream of reaching greater entrepreneurial heights, without much of a setback.
The new description of internal auditing focus on corporate governance, especially the Board of Directors. This definition highlights internals’ audit role in assisting the entity to accomplish its objectives. As of the fact that the Board of Directors is ultimately accountable for the entity’s achievement of its objectives, the internal auditor’s influence is to deliver information to that group. (Colbert, 2002). The papers seek to empirical and statistically ascertain the impact of the internal audit in the corporate