Identifying the Measures of Regulatory Compliance Controls

Corporate governance is the responsibility of an organization’s board of directors (BOD). The internal auditor (IA), the external auditor (EA), and the information technology (IT) auditor all play important roles in the process of corporate governance. By using established frameworks established by the Sarbanes-Oxley Act (SOX), the Integrated Framework from the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and the Control Objectives for Information and related Technology (COBIT), organizations can demonstrate their adherence to regulations and legal requirements. Under SOX, these control frameworks have become the law and are no longer voluntary best practices. The audit process itself assists organizations

According to Rice, Weber, and Wu (2015), the SOX 404 requires all companies and auditors to submit formal opinions of the company’s effectiveness of internal controls over financial reporting with their yearly 10-K filing. Within SOX 404, companies and auditors must determine if the company’s internal controls are affective or ineffective. Additionally, SOX 404 only considers internal controls effective if there are no reported material weaknesses. If a company has material weaknesses, they must be reported and defined. SOX 404 was created in order to help improve an investor’s assurance in the dependability of financial reporting (p. 1170). The purpose of this article

Maintaining compliance with applicable regulations avoids legal liabilities and potential fines. This is especially true in highly regulated industries, such as investment and health care organizations.

Sarbanes Oxley mandates requires all public companies to establish internal controls and procedures for financial reporting. In addition they must document, test and maintain those controls and procedures to ensure their effectiveness. The purposes of SOX are to emphasis on corporate governance and to reduce the possibilities of corporate fraud by increasing the stringency of procedures and requirements for financial reporting.

The Sarbanes-Oxley Act of 2002 in the most general terms is a law passed by the United States Congress to help stop publicly traded corporations and their leaders from committing accounting and financial fraud. The act is made up of various sections but we will go into detail only about a few of them including Section 302, Section 404, Section 409, and section 802 which deal directly with IT (Brown, 2005, 313). Section 302 deals directly with the officers of a company and requires them to “make representations related to the disclosure of internals controls, procedures, and assurance from fraud (Brown, 2005, 313).” In other words, companies will be required to have their CEOs and CFOs sign off on all publicly made financial statements. Also, in a recent survey “44 percent of the companies will require the CIO to certify financial results under SOX compliance (Brown, 2005, 313).” This certification will include the CIO signing a statement attesting to the accuracy of the financial statements as well as the effectiveness of

Once SOX was implemented, companies have spent a lot of time, money, and effort in ensuring all of the rules and requirements are being followed. Soon after the SOX was implemented, the Security and Exchange Commission (SEC) went one step further and implemented Section 404 of SOX. Section 404 of SOX requires companies and auditors to provide official statements on the effectiveness of their established internal controls over financial reporting within their 10-K report (Rice, Weber, Wu, 2015). Within these opinions the company must report on how effective or ineffective their internal controls are. Under

The Sarbanes–Oxley Act has made the organizations follow strict controls. The first thing that it tends to do is that looks at the way the overall adequacy of the financial reporting is carried out with the context of the internal control (Hostak et al, 2013). This is though very hard thing on the part of the organization as the cost implication of carrying out such strict control is hardly going to be an issue (Hostak et al, 2013). The components of the internal control are bound to vary from one organization to another as the business processes are bound to be different from one place to them. The way the annual exchange report is needed to be taken care off is another fact that has to be kept in mind (Abdioglu et al, 2015). The fact of the matter is that there must be affirmation on the part of the management that they should establish an internal control structure that is adequate in its nature and at the same time, it allows the better control structure as far as the

A company’s management clearly acknowledges their liability for capable of accurate, reliable, and timely financial reports. This accountability is addressed through the firm making use of a well thought-out “internal control framework the Internal Control – Integrated Framework that has been delivered by the Committee of Sponsoring Organizations of the Tread-way Commission”

The Sarbanes-Oxley Act of 2002 (SOX) requires organizational assessments to focus on corporate governance over broad systemic firm-wide checks and balances, including risk management, communications, the whistleblower provision, and conflict-of-interest issues (Farrell, 2005). The responsibility of maintaining effective internal controls lies strictly on CEO’s and CFO’s as they are responsible for signing off on the financial statements. Any violations can be subject to criminal penalties.

Today the job of auditing and managing quality is more prominent mainly because of the Sarbanes Oxley Act (“Sarbanes Oxley”). The Sarbanes Oxley Act was initiated to ensure that all companies would be in compliance with certain safety and quality standards. Sarbanes Oxley Act is meant to protect companies and civilians alike. The Sarbanes Oxley Act requires that CEO’s and CFO’s review all financial reports, so that there are no misinterpretations on the report and make sure that all information is fairly presented. CEO’s and CFO’s are also held accountable for reporting any deficiencies or mistakes in internal accounting controls, and avoiding fraud involving the management of the adult committee (“Sarbanes Oxley”). The Sarbanes Oxley Act also mandates that CEO’s and CFO’s indicate any material changes in internal accounting affairs (“Sarbanes Oxley”). Companies are required to disclose information concerning

There are requirements placed on management to maintain an accurate accounting of the company. A failure to do so could result in penalties, fines and/or imprisonment. The Sarbanes-Oxley Act (SOX) of 2002 requires that all public companies have internal controls (IC) in place by keeping records and having an outside auditor’s review the records for sound accounting practices.

The Sarbanes Oxley Act mandates transparency, clear accountability, and rigorous internal control, which requires corporate governance and IT governance to work together. Top executives are held accountable under the Sarbanes Oxley Act for internal controls and transparency of the organizations. Without corporate governance and IT governance working together, the organization would not be in compliance with this regulation.

Setting the right “tone at the top” of an organization is essential to improve the effectiveness of internal controls (PCAOB, n.d.). Ineffective controls can lead to misconduct and fraud, which can impact an organization’s reputation, market value, and ability to achieve financial goals (PCAOB, n.d.). Many examples of misconduct and fraud in business practices are well known, such as Enron, and others continue to surface today. The 2013 framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) is utilized by most public companies in support of compliance with the 2002 Sarbanes-Oxley Act (SOX), section 404(b) (McNally, 2013).

The Sarbanes-Oxley Act of 2002 (SOX) is the only legislated corporate governance structure, and is aimed at increasing investor confidence in public companies by forcing them to be transparent in their financial affairs. In order for companies to comply with the legislation, significant costs need to be incurred without any guarantee that the benefits will accrue to the investors or the company. The legislation will

A company’s financial reports are the primary method of communication between management and the public. Management has both a legal and professional responsibility to prepare these reports for investors, creditors, and any other potential users. The financial statements and reports provide vital information to the outside users as well as users inside the company about the financial position and past performance. It is important that the information in the reports can be reasonably assured as fairly stated and the reports are made available in a timely manner. For this reason the importance of an effective system of internal controls over financial reporting cannot be overstated.