The Sarbanes Oxley Act : On Internal Control

2008 Words9 Pages
The Effects Sarbanes-Oxley Act Have On Internal Control Introduction The Sarbanes–Oxley Act which is also popularly known as the public company accounting reforms is considered as one of the landmark acts if one talks about the way the internal controls are talked about. What this act has done is that it has set pretty much the new and much more controlled requirements as far as the management of the public limited companies is concerned and how they are supposed to take care of their management and overall business conduct (Hostak et al, 2013). At the same time, the interesting thing about the fact is that there are some provisions of the act that also apply to the public accounting firms (Hostak et al, 2013). Background and Need for…show more content…
The fact of the matter is that there are many things that are related to the documentation and the testing that has financial impact and what is needed on the part of the organizations is to make sure that they take into account the automated controls that can make sure that the required effort is being taken care off (Li et al, 2012). Organizational Internal Control 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
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