Management 's Responsibilities Over Financial Reporting

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

So what are internal controls? And why are they so important? Internal controls describe the policies, plans, and procedures

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

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

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

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2013). Financial accounting: Tools for

Auditors usually use the internal control to assess the adequacy of the accounting system as a basis for preparing the accounts and consider factors that will affect the risk of misstatement. There are five components of internal control such as control environment, risk assessment, controlling activities, information and communication and monitoring

Internal control refers to methods, techniques and measures that are practices by a company to safeguard the assets, enhance reliability of its accounting records, increase efficiency of its operations and making sure everything they do is in line with laws and regulations as ordered by security and

Internal controls are policies, procedures, methods and measures to provide reasonable assurance. There are four general objectives of internal control: 1. Assets are safeguard and used for business purposes 2. Accounting

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:

This paper sets out to define and really discuss what an internal control is and how it came to be. It will touch on what purpose an internal control serves to an Accounting Information System. This paper will look at the five components of internal controls that were created by COSO. It will provide a definition and example for each of these components. It also touches on some of the advantages and disadvantages that can occur when implementing an internal control system. The hope is this paper provides a better picture of just how important internal controls are for an organization to run efficiently and effectively.

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.

Among five interrelated factors composing internal control (Figure1: The COSO Cube), there is monitoring. This is mainly conducted by internal and external auditors to assess whether implemented internal control are functioning properly and effectively. In the course of this ongoing monitoring, if some deficiencies are to be discovered, then auditors report upstream to managers and the board. Compared with internal auditors, external auditors could bring about more

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