Accounting internal control is the methods and procedures used to ensure the accuracy and validity of the financial statements, as well as to protect against abuse and fraud, making sure information is delivered in an accurate and timely manner. (Griffin) Internal controls consist of information systems and physical controls that are carried out in the line of job duty. The two primary goals of internal control is to ensure that financial information is delivered accurately and free of material misstatements, as well as to protect investors and the company from fraud and theft. Without internal controls, investors are damaged with losses and the company's financial condition is damaged, which can cause bankruptcy, or even closing of the company with huge losses.
Prior to the implementation of Sarbanes-Oxley Act of 2002, huge accounting scandals erupted that cost investors their money, employees their jobs, and caused companies huge losses of assets and bankruptcies. Auditors were not held to independency rules and law had a lot of loopholes in the GAAP rules. There were open doors for fraud. Company management and auditors were manipulating the rules without breaking them to achieve financial targets.
To protect investors by improving the accuracy and reliability of corporate disclosures, SOX was implemented and introduced the Public Company Accounting Oversight Board (PCAOB). The PCAOB oversees the audit of public companies that are subject to securities laws, and related matters, to protect the interests of investors and further public interest in the preparation of informative, accurate,...
Internal Control In the United States, all corporations planning to go public have to maintain an adequate internal control system. LJB is a small company that does local distribution and wants to go public. The president has decided to get an independent audit firm to carry out the assessment while identifying its areas of weakness. In case failure is reported by this audit firm, it could be fined or the officers
Internal controls are "methods put in place by a company to ensure the integrity of financial and accounting information," and to protect the organization's assets from misappropriation by internal sources (Investopedia, 2013). Internal controls help to prevent fraud, but they also allow the company to have reliable data on all transactions, which can be used for any number of control purposes. Further, internal controls promote operational efficiency and they encourage adherence
Internal Controls Provide an example of an item that pertains to either (a) the internal control environment (the umbrella) or (b) a monitoring activity or (c) a risk assessment activity that relates to Microsoft Corporation. In 2002, the SEC settled with Microsoft on allegations of accounting violations that understated revenues. Microsoft did not admit to any wrongdoing. The settlement did call for the corporation to cease and desist from misstating income, without
Internal Control and Accounting Analysis of ABC Limited: Analysis of Weaknesses and Recommendations The report was prepared to cover the requirements of the AAT ICAS unit. The AAT ICAS refers to an Internal Control and Accounting System where the report serves as investigation of the weakness area of the business control and makes the recommendation to fix this problem. The following report reviews the restaurant business particular in payroll area. The
Discrepancies This case study is indeed correct in asserting that properly run inventories truly are essential to the functioning of any organization. Inventory discrepancies need to be eliminated aggressively in order for an organization to move forward. Furthermore, this case study was astute to assert that such discrepancies could be avoided by examining past mistakes and working hard to fix them. Furthermore, the cases study was also wise to point
Once the invoice is received, the accounting personnel should check if it matches the pending purchase order. The data introduced in the accounting system should roughly include the following: the current date, the invoice date, the purchase order number, the General Ledger account number and the amount of the actual invoice. The check must be completed and any supporting documentation should be attached and forwarded to the Office Manager for
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