Internal Controls Essay

Pages: 2 (664 words)  ·  Bibliography Sources: 3  ·  File: .docx  ·  Level: College Senior  ·  Topic: Accounting

Internal Controls

SOX and Corporate Governance

The Sarbanes-Oxley Act of 2002 (SOX), is a law enacted as a direct result of corporate scandals such as Tyco International, Adelphia, WorldCom and Enron. The reason that SOX is an important tool to avoid further scandals is that it creates the Public Company Accounting Oversights Board to register and regulate all public accounting firms, as well as requiring that the CEO of a corporation, along with its chief financial officers certify that all financial statements are accurate -- this to keep the CEO from trying to disavow any knowledge of wrongdoing as occurred in several of these scandals (OSU, n.d., para. 2,5). SOX also takes several steps to prohibit certain activities by corporate executives and provides whistle blower protection as well as establishing criminal penalties for actions taken by the corporation against them.

In summary, SOX addresses almost all of the criminal offenses that were committed in the corporate scandals both by the corporation itself and the accounting firms who committed offenses in their auditing of the firms. On the other hand, Wallace (2007) reports the jury is still out on its affectivity but that there are indications of its sufficiency along with other legislation to "power incremental change" and to restore the public confidence in corporate governance.

IFRS

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International Financial Reporting Standards has established a "framework" by which corporate financial statements must provide understandable, relevant, reliable, and accurate statements to its shareholders of the corporate financial position. More than 100 countries have adopted the new accounting standards incorporated into IFRS. However, it is only now being implemented by a small number of companies, and is not mandatory until 2014 for large public companies. The indications, as with SOX, are positive towards increasing investor transparency into the financial operations of these corporations.

Essay on Internal Controls Assignment

Internal Audit

This basic function of a corporation assessing its own internal control systems and identifying and correcting deficiencies has been strengthened through some of the processes and legislation we have already discussed.… [END OF PREVIEW] . . . READ MORE

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APA Style

Internal Controls.  (2009, September 28).  Retrieved December 4, 2020, from https://www.essaytown.com/subjects/paper/internal-controls/114122

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"Internal Controls."  28 September 2009.  Web.  4 December 2020. <https://www.essaytown.com/subjects/paper/internal-controls/114122>.

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"Internal Controls."  Essaytown.com.  September 28, 2009.  Accessed December 4, 2020.
https://www.essaytown.com/subjects/paper/internal-controls/114122.