Internal Control Weaknesses Leave Alchemy, Inc.

As any other organization, we have established organizational codes of ethics. Many of these codes Ferrell described are trustworthiness, respect, responsibility, fairness, caring, and citizenship. (Ferrell pg. 226) Principles and values that we have in our organization are very important to the organization to set the boundaries for behaviors that

There are many rules companies must follow whenever documenting financial information or any other data which is gather during any business transactions. In order for said companies to report financial information internal controls have to be put in place as companies have to adhere to certain laws and regulations. Internal controls can be defined as a process which companies follow in order to ensure all financial reporting is done in a reliable and lawful manner. Some think of it as a system which works within a system as it plays a major role on the success of a company’s accounting system. At the organizational level, internal control objectives relate to the reliability of financial

Corporate fraud was the cornerstone for the strict implementation of the Sarbanes-Oxley Act of 2002 (SOX). SOX implements many compliance regulations, but one of its regulations, specifically Section 404, relates to an organization’s internal control procedures with the purpose of protecting organizational assets and investors’ interest. Consequently, organizations, big or small, private or public, are prone to fraud. SOX’s compliance of internal control procedures is developed through the Committee of Sponsoring Organizations of the Treadway Commission (COSO) known as the COSO framework that consists of the following procedures: control environment, risk assessment, control activities, information and communication and monitoring. Each variable address a layer that builds upon each other by

Internal controls are vital to any company’s business and financial sustainability. Internal controls consist of measures taken by a company safeguarding against fraud, and theft. Internal controls ensure accuracy and reliability in accounting data, and secure policies within the organization. Further, internal controls evaluate all levels of performance. These are addressed with five principles

The Committee of Sponsoring Organizations (COSO) defines internal control as a process, effected by and entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the reliability or financial reporting, the effectiveness and efficiency of operations, and compliance with applicable laws and regulations. (Louwers, Ramsay, Sinason, Strawser, & Thibodeau, 2015). Internal Control helps entities achieve important objectives and sustain and impose performance. A properly

Internal Controls are to be an integral part of any organization's financial and business policies and procedures. Internal controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization. Internal controls are simply good business practices (Strauss, 2003). And, since internal controls can have many more meanings in the world of accounting, the more we understand what were dealing with, the better we can analyze internal

With regards to internal control and evaluation, the “Sarbanes-Oxley Act of 2002” is the manuscript to address fraud and risking the trustworthiness of the corporation.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) was first implemented in 1985 to support the National Commission on Fraudulent Financial Reporting, as well as working with auditors and the Securities and Exchange Commission (SEC). The committee’s objective was to produce thought leaders for Enterprise Risk Management (ERM), fraud determent, and internal control and financial reporting (ICFR) in 2004; COSO introduced the ERM-Integrated Framework. (COSO, 2015) SOX 404, mandates the use of an internal control framework by the management of publicly traded entities. Since 1992, multiple companies have used COSO’s framework. In May of 2013, COSO updated its Internal Control-Integrated Framework, updating was in response

Section 404 of the Sarbanes-Oxley Act of 2002 requires companies to report their control procedures in the annual reports. The reporting of control procedures is essential in the determination of the management responsibility over the internal control systems set by the company. The extent of the subjectivity of the financial statements is controlled by the nature of the internal control systems that have been developed over the financial statements.

under the Sarban Oxley act, companies are essential to achieve a fraud risk assessment and assess related controls. This in general involves identifying scenarios in which theft or loss could take place and influential if existing control procedures efficiently manage the risk to an satisfactory level. The risk that senior management might take priority over important financial controls to influence financial reporting is also a key area of focus in fraud risk assessment.

The Sarbanes-Oxley Act (SOX) of 2002, aims to combat fraud, improve the reliability of financial reporting and restores investor confidence. Section 404 of Sarbanes-Oxley emphasize the management’s responsibility in maintaining a sound internal-control structure of financial reporting and assessing its own effectiveness. While the auditors’ responsibility is to attest to the soundness of management’s assessment and to report on the state of the overall financial control system. Although it has been a question by most executives, however, some approached the new law with gratitude. As SOX went into effect, more executives had realized the need for internal reforms; they were startled by the weaknesses and gaps of their internal control that compliance reviews and assessments had exposed.

The Sarbanes Oxley Act of 2002 is what enforces such internal controls of companies. This Act requires all United States companies to follow internal control guidelines and standards. Many argue

The second article reviewed was Does SOX 404 Have Teeth? Consequences of the Failure to Report Existing Internal Control Weaknesses. The abstract discusses the penalties associated with Section 404 of the SOX. In addition, the abstract looks at companies that have submitted restatements and views the control weaknesses report within the restatements.

Key steps that a company should take, like The Cheesecake Factory could take in order to guarantee the employees follow the code of conduct. First step is to have a customer service department that takes care of all problems and investigates code of conduct issues. Another step that The Cheesecake Factory can take to make sure the employees follow the code of conduct is to have all employees sign the code of conduct when hired and to make sure the employees have a copy they can keep and make sure to keep a copy in the employees file. Also need to make sure employee’s get a handbook on all these topics. This will make it possible for the employee to know all the code of conduct rules and regulations.

The final responsibility for the integrity of an SEC registrant’s internal controls lies on the management team. U.S. companies need to refer to a comprehensive framework of internal control when assessing the quality of financial reporting to determine that financial statements are being presented under General Accepted Accounting Principles, GAAP. The widely used framework is referred as COSO, Committee of Sponsoring Organizations of the Treadway Commission, sponsored by the following organizations American Accounting Association, the American Institute of CPA’s, Financial Executives International, the Institute of Internal Auditors, and the Institute of Management Accountants. COSO’s defines internal control as: