Internal Control Assessment For A Company Essay

The chances of failures can be decreased by executing the checks on the systems. These keep an eye on the systems preventing risks from occurring, and these checks are avoided as the interior controls. The motivation behind the inner controls is to keep the organization safe from risks associated with the modernized accounting-system risks. Organizations change their manual accounting systems to computerized accounting systems for different reasons, this incorporates the points of interest, and the explanation behind utilizing electronic accounting information is instinct. The organizations embrace the policies of their

According to the Sarbanes-Oxley Section 404 Act, it is the responsibility of the management to establish and maintain internal controls required for financial reporting. The company’s latest year assessment of

“Accounting is the information system that measures business activity, processes the data into reports, and communicates the results to decision makers.” (Horngren & Harrison, 2007, p. 4) Decision makers within an organization need accurate accounting information to manage organizational activities and turn these efforts into success. Internal accounting accuracy plays just as important of a role outside of internal

Internal controls represent an organization’s processes and procedures used to meet its goals and objectives and serve as a defense in safeguarding assets and preventing and detecting errors, fraud, and abuse. Effective internal controls provide reasonable assurance that an organization’s objectives are achieved through (1) reliable financial reporting, (2) compliance with laws and regulations, and (3) effective and efficient operations. The passing of the Sarbanes-Oxley Act of 2002, as well as the numerous corporate frauds and bankruptcies over the past decade—including some

Dentistar, Inc. was formed in 1985 to provide dental and orthodontic services to subscribers of their prepaid dental plans. This report examines the western region’s office, located in Los Angeles, and its issuance of excessive manual checks that resulted in multiple bank overdrafts. Results indicate that only minimal efforts have been made for internal control measures in this office and companywide, and that weaknesses have allowed the Finance Coordinator to embezzle funds. There are many issues to be addressed, and several remedial actions to be taken to prevent these types of losses going forward.

Most of these laws are used within an organization as well to help aid in the accurate reporting of the financial reports and help them organize internal and audit controls within the organization to prevent potential fraud and misappropriation of funds. Sarbanes-Oxley Act 2002 mandates that all preparers, auditors, analysts, and users operate and know the importance of governance and internal controls. (Huefner, 2011) The Treadway Commission’s (COSO) The Committee of Sponsoring Organizations lists the objectives of internal controls and its importance. (Huefner, 2011) Internal Controls have to be monitored often. These are controls that change overtime based on the needs and the functionality of the organization. Random audits are one way to identify problems that may arise with internal controls. If this is not done often, it suggests that there could be a weakness in internal controls. Weakness in controls leads to fraud to occur within a company. If there is no monitoring of the internal controls than there is a risk of fraudulent behavior among employees and potential misappropriation of funds when reporting financial reports to the federal government. There is no validity to financial reports created and the auditor or professional accountant completing the financial reports

I completed the Internal Control Program requirements for the International Affairs Foreign Military Sales D/NGA FY16 Statement of Assurance to the Secretary of Defense. This assessment tests the effectiveness of mission-essential processes and key internal control activities, to identify areas of risk associated with foreign military sales work procedures. Further, I reviewed and completed a process document detailing the high level process flows and narratives for the NGA Foreign Military Sales program. This document is critical in showing internal auditors the program has healthy operational and financial manual and systemic controls that are in alignment with Defense Security Cooperation Agency policy. It also ensures International Affairs

LJB Company has asked the accounting firm to evaluate their system of internal controls because of the plan to go public in the near future. The president wants to be aware of any new regulations required of his company if they go public. The current system of internal controls was explained to the accounting firm. Under SOX Sarbanes-Oxley Act of 2002, all public traded U.S. corporations are required to maintain a sufficient system of internal controls. In order for this to be implemented all Corporate Executives and

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:

| | | |Are the programs and performance of the employees evaluated on a regular basis to determine relevance and |

34. If other entities are involved with sharing the risk, are they evaluated for soundness?

The control environment is what sets the tone for an organization and is the foundation for all other components of internal control. It provides discipline and structure and reflects the ethical values, integrity and competencies of the organization. The control environment is very important to effective internal control over financial reporting to an audit client like WorldCom, because good designs can prevent and detect frauds and errors. But because WorldCom had such a poor control environment, the company would require more testing for an audit. This shows that the board did not exercise oversight responsibilities over financial reporting or internal controls.

The nature and extent of the audit work to be performed on a particular engagement depend largely upon the effectiveness of the client’s internal control in preventing or detecting material misstatements in the financial statements. Before the auditors can evaluate the effectiveness of internal control, they need a knowledge and understanding of how it works,what control exist and who perfoms them, how various types of transactions are processed and recorded, and what accounting records and supporting documentation exist. The auditors must have a sufficient understanding of the design and implimentation of internal control to plan the audit.

These changes were outlined in the Sarbanes Oxley Act of 2002 (SOX). SOX completely revolutionized financial reporting, requiring senior management of firms to sign off on each financial statement that the company issues. It also stipulated that wrongful doing can result in not only termination but also imprisonment. SOX amplified the requirement for companies, requiring firms to maintain proper levels of internal controls when it comes to operating activities. SOX also established the creation of the Public Company Accounting Oversight Board (PCAOB) which implemented stricter auditing standards for public accounting firms. Not only were accounting firms required to consider internal controls, but they were also required report any significant deficiency directly to the board of directors. SOX stressed the importance of internal controls, and within internal controls it established the need for segregation of duties. Since this time, there have been many additions to accounting policies regards segregations of duties, and many functions of the business process dedicated to it.

Effective internal controls protect a company’s assets, maintain compliance, improve operations, prevent fraud, and promote accuracy in financial reporting. In 1992 the