...Alexandra Lambert Internal Controls XACC/280 May 4, 2014 Primary Goals Internal controls are in place to ensure proper financial accounting, reporting, operations, and compliance are preformed properly. Without them, chaos could ensue and many companies go bust because of failed internal controls or lack thereof. Two of the primary goals of internal controls are maintaining proper records and reports and ensure the safety of financial gains and assets in the company. Without these two, fraud, theft, and several other game-changing acts can occur in the company. Sarbanes-Oxley Act The Sarbanes-Oxley Act (SOX) of 2002 was put in place to make sure responsibility for failed internal controls was handed out to the right people. Chief executive officers and higher-ups are held responsible for a company’s internal controls. SOX act also implanted that an outside party auditor preform the necessary audits to ensure the internal controls are efficient and are doing their job. A company should have an efficient internal control in place before any business is preformed. Internal Control Deficiencies Internal controls keep things safe within a company. When or if a company were to claim that their internal control has deficiencies, investors or previous stockholders are likely to back out and stock would go down, as it would not be convincing that their funds were secure. Deficiencies in the internal control of a company will impact the company negatively in many aspects...
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...Internal Controls <Name> XACC/280 <Date> <Instructor> Internal Controls (a) Indicate the weaknesses in internal accounting control over the handling of collections. There are many weaknesses in the current process in which the church collects, documents, and secures the weekly collections. The first problem is that the finance committee, who prepares the annual budget and approves major disbursements, are not involved with the collection and record keeping process. How can a group which has that much power not be involved in the collection and security of such an important asset of the church which is the cash? Next, no internal audit of the finances has been done in 15 years because they trust the financial secretary who has been in the position for 15 years. Regardless of how long a person has been in charge of the collections, bad things happen to good people all of the time. And if this trusted person did mishandle the church funds, the church has no fidelity insurance to protect them from any losses. There are also problems with the collection process itself. Once collected, the ushers take it to the basement of the church where it is left with one person, the head usher, who counts the money alone, documents the amount, and places the collection in the safe. The head usher position is a three month volunteer position. The church is putting too much trust in these individuals. They are counting the money alone and they access to the safe. This...
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...Internal Controls Megan Mitchell March 14, 2013 XACC/280 Paul Gomez Internal Controls 2 In order to maintain a company’s security and accuracy, a company will take all related measures and measures adopted within an organization in the form of internal controls. Internal controls are an essential way to maintain conformity with other company’s, to safeguard assets from employee theft, robbery and unauthorized use, and enhance accuracy and reliability of it’s accounting records (Weygandt, Kimmel, & Kieso, 2008). Since major company’s such as WorldCom and Enron were able to commit such extreme measures of fraud, in 2002, Serbanes-Oxley Act (SOX) was passed by congress to ensure company’s enacted internal controls and required them to maintain an adequate system of internal controls (Weygandt, Kimmel, & Kieso, 2008). The SOX requires that all companies must develop sound principles of control over financial reporting, continually verify that the controls are working, and an independent auditor must attest to the level of internal controls. There should be physical, mechanical, and electronic controls so that when jobs are segregated, there are more than one opportunity for a final verification of accuracy (Weygandt, Kimmel, & Kieso, 2008). In years prior to the SOX, the heads of companies did not pay very close attention to the many individual jobs that were necessary to maintain an accurate accounting system. When a business...
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...Internal Controls 02/15/2014 XACC/280 Toral Kapur Employee theft, inaccurate reporting, and errors in accounting are all things that can derail a business and lead to financial losses. The purpose of internal controls are to reduce the risk of loss to a company by two primary means. The first method is called safeguarding assets, this consists of protecting assets from employee theft, unauthorized use, and robbery (Weygandt, 2008). The second means of internal control is enhancing and the accuracy and reliability of accounting records (Weygandt, 2008). The second method means that a company has systems in place that reduce unintentional errors and intentional errors like misrepresentations in the accounting process (Weygandt, 2008). Lack of proper internal controls helped usher in an age of corporate scandal in the early 2000’s. This led to Congress to enact new legislation that held corporations responsible for their internal control systems or the lack thereof. The Sarbanes-Oxley Act of 2002 holds the corporate executives and the board directors liable for the accuracy of financial reporting (Weygandt, 2008). The board of directors also must have outside auditors go over the internal controls and verify the accuracy of financial accounting. An offshoot of the Sarbanes-Oxley Act has been the creation of the Public Company Accounting Accuracy Board. The PCAAB helps to create auditing and accounting standards across the country. Since the passage of the law investor...
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...Internal controls: an overview XACC/280 Internal controls are absolutely essential to the functioning of any public company, and without them companies are doomed to economic turmoil and even collapse. Simply put, internal controls are the various methods that a company uses to “Safeguard its assets from employee theft, robbery, and unauthorized use” and “enhance the accuracy and reliability of its accounting records” (Weygandt, Kimmel, and Kieso, pp. 340). As the text implies, without these controls the corporation would be vulnerable to any number of external and internal problems. In fact, the Sarbanes-Oxley Act (SOX) has many regulations to ensure the creation and maintenance of these internal controls, with severe penalties to those companies that do not do so. When the government passed the SOX in 2002, it was intended that SOX force “companies to pay more attention to internal controls” (Weygandt, Kimmel, and Kieso, pp. 341). This was in direct response to several corporate scandals that involved corrupt business practices, poor accounting, and non-transparent public financial statements, and inevitably the loss of billions in investor dollars. These laws help to ensure that internal controls are developed using “sound principles of control over financial reporting” and that they “must continually verify that these controls are working” Weygandt, Kimmel, and Kieso, pp. 341). All of this means that they are a watchdog ensuring that companies are honest and forward...
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...Internal Controls XXXXX XXXXXXX XACC/280 Financial Accounting Concepts and Principles January 2014 Internal Controls Internal Controls two primary goals are to protect their assets from employee theft, robbery, and unauthorized usage. Also to increase accuracy of the company financial information, reducing risk of errors whether they are accidental or intentional. Internal Controls also ensure compliance with federal, state, and local laws and regulations that affect the operations of a business. Internal Controls are the responsibilities of the company to put into place, the responsibility of the management to see they are kept in place, and the responsibility of the employees to adhere to. With Internal Controls they are classified as either preventive or detective. Preventive controls are designed to avoid error or irregularities from occurring. A few examples of preventive could be; separation of duties for cash handling by assigning different individuals to duties such as collecting cash, maintaining documentation, preparing deposits, and reconciling records. Detective controls are designed to identify an error or irregularity after it has occurred. These controls should be performed on a routine basis to identify any issues that pose potential risks to a company on a timely basis. A few examples are; an exception report detects and list incorrect or invalid entries or transactions; a comparison of validated Cash Receipt Vouchers to monthly account detail to detect...
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...Internal Controls Ashly Rea XACC/280 September 22, 2012 Adrienne Cooper Internal Controls If you cannot trust your employees to protect your revenue, whom can you trust? In most cases the answer is not whether you can trust your employees but how effectively you are monitoring them. Internal control means doing just that, setting up methods and measures within an organization to establish control. Companies such as Tyco and Enron are examples of company destruction from a lack of internal control. With a strong internal control in place companies are able to protect their assets. This includes employees engaging in theft or robbery and takes care of any unauthorized use of any of the assets. Companies are also able to have reliable accounting financial records. Internal control helps to ensure accuracy in the work. In order for internal control to be functional there are specific control principles in place. Depending on the size and functions of the business, these principles can alter slightly. The majority of companies follow four internal control principles. These four principles are establishing responsibility, segregation of duties, using physical, mechanical, and electronic controls, and independent internal verification, It is impossible for one person to make sure all areas of the business are perfect. In order to be the most efficient, companies need to assign the responsibility to certain employees. It makes it easier and more...
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...Internal Controls XACC/280 m m Internal controls are an integral part of a business operation because of the extreme importance of assets. Assets are basically an economically valued item owned by an individual or corporation, which most often has a direct conversion rate to cash. Examples are cash, securities, accounts receivable, in-stock product, business equipment, real-estate, cars, and other valuable property. Assets are business resources which could lead to being able to generate future services and benefits. Operational goals of profitability are achieved through a company’s assets. These are the resources and possessions which allow businesses and corporations to provide goods and services to generate profits. Assets can be current assets like cash, accounts receivable, inventory, and prepaid expenses that generate profits or gains within the current accounting period. They also can be long-term items such as property and business equipment. Since these assets are a businesses’ or corporations’ most valuable resources, they must be protected from theft and unauthorized use by creating, and implementing, a company “internal controls system.” Internal controls are procedures and protocols by which a company conducts internal monitoring. Through taking it upon itself to audit its own business dealings, a company increases the chance of success. Also, these controls systems ensure the liable parties invested in companies that their business are running...
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...Running Head: INTERNAL CONTROLS Internal Controls XACC 280 Internal Controls This paper will cover the ins and outs of internal controls. It will also tell why they are important not only to companies, but why they are important to investors, creditors, and even the public too. Internal controls are a serious of methods and measures that companies put in place to insure that errors or irregularities in the accounting process do not happen very often. In every company there is a chance of having one or more employees who are dishonest and may take from the company. Internal controls helps to keep this from happening on a regular basis. Internal controls have two primary goals. The first primary goal is to safeguard a company’s assets. This goal is to protect a company’s assets from being misused without permission, theft, and even robbery. The second goal of internal controls is to improve the consistency and correctness of a company’s accounting records. Internal controls accomplish this goal by decreasing the threat of errors or irregularities in the financial accounting process (Internal Controls, 2012). These two goals help make companies trust their employees and investors feel confident in their decision to invest in a company. Internal controls have not always been enforced. This is the reason for the collapse of Enron, Tyco, etc. The Sarbonese-Oxley Act (SOX) has helped make internal controls a requirement for all publically traded...
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...Financial Analysis XACC/280 June 29, 2014 Johnny Hamblin Financial Analysis The purpose for this analysis is to compare PepsiCo to Coca-Cola. This will be done by providing a summary of financial accounting information for each company. The information to compare each company comes from financial statements that were provided via Appendix A and B. Those numbers were then broken down into vertical and horizontal analysis as well as ratios. Once the ratios are calculated, an investor can decipher is the company is worth investing in or the company itself can make necessary adjustments to better its numbers. The information was gathered from financial statements of both companies for the year 2004 and 2005. I will provide a description of each of the companies before comparing their finances. Coca Cola was established in 1886 in Atlanta, Georgia. An Atlanta pharmacist by the name of Dr. John S. Pemberton created it (The World of Coca Cola). Frank M. Robinson, is credited with naming the beverage “Coca-Cola” as well as designing the trademarked, distinct script, still used today (The World of Coca Cola). Coca Cola manufactures carbonated and non-carbonated beverages. There are different brand names of soda, sports drinks and also well selling energy drinks. PepsiCo, Incorporated was established through the merger of Pepsi-Cola and Frito-Lay (PepsiCo). Pepsi-Cola was created in the late 1890s by Caleb Bradham. He was also a pharmacist based out of...
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...|[pic] |Syllabus | | |Axia College/School of Business | | |XACC/280 Version 2 | | |Financial Accounting Concepts and Principles | Copyright © 2010, 2009 by University of Phoenix. All rights reserved. Course Description This course covers the fundamentals of financial accounting as well as the identification, measurement, and reporting of the financial effects of economic events on the enterprise. Financial information is examined from the perspective of effective management decision making with special emphasis on the planning and controlling responsibilities of practicing managers. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning...
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...Stephanie Burke XACC/280 September 19, 2010 Sylvia White Shepherd The purpose for this analysis is to compare PepsiCo to Coca-Cola; this is done by providing a summary of financial accounting information. The information to compare a company to another comes from financial statements and then those numbers are broken down into analysis and ratios. Once the ratios are calculated then the investor can decipher is the company is worth investing in. The information gathered is from the attached financial statements of both companies for the year 2005. Below is a small description of the two companies before comparing them. PepsiCo manufactures or use contract manufacturers for their products. This company markets and sells a variety of salty, sweet and grain-based snacks, carbonated and non-carbonated beverages, and foods through North American and international business divisions (Navigator). Within PepsiCo one can find them merged with Frito-Lay, Tropicana, Quaker, and Gatorade. Coca-Cola manufactures carbonated and non-carbonated beverages. New beverages joined Coca-Cola’s line up, including Minute Maid, Powerade, and Dasani bottled water. Coca-Cola is throughout Northern American and international business divisions. Ratio analysis expresses the relationship among selected items of financial statement data. A ratio expresses the mathematical relationship between one quantity and another. The relationship is expressed in terms of a percentage, a rate, or a simple...
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