...Internal Controls XACC/280 Internal Controls are an integral part of an organization’s financial and business policies and procedures. They consist of all various measures take to protect resources, ensuring accuracy and reliable data in accounting as well as operations, securing compliance with policies, and evaluating performance within the organization. Every bit of an organization’s recourses are directed, measured and monitored by Internal Controls. Internal Controls safeguard all of a company’s (or organization’s) assets from fraud, theft or any type of robbery. They also enhance accuracy within its accounting records by reducing errors and regularities (unintentional or intentional). It is good business practice for all organizations to have Internal Controls that focus on safeguarding assets and manage all resources. It is checks and balances type of protection and provides assurance of reliable operational and financial data, effective and efficient operations, and compliance with state and federal laws as well as internal policies. In July 2002, the Sarbanes-Oxley Act (SOX) was signed into law. Composed by Senator Paul Sarbanes and Representative Michael Oxley, this act, compiled of eleven titles, set a number of non-negotiable deadlines for compliance by corporations. This act was due to outbreak of corporate scandals and bankruptcies in 2000, such as Enron, Tyco International, World Com, and Adelphia. With the collapse of these corporations and the loss of...
Words: 941 - Pages: 4
...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...
Words: 740 - Pages: 3
...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...
Words: 1232 - Pages: 5
...INTERNAL CONTROLS JANINE LEWIS XACC/280 DECEMBER 8, 2013 JOSE RODRIGUEZ INTERNAL CONTROLS Internal controls are methods that companies put in place to protect themselves from errors, internal fraud or corruption. The methods consist of review, checks and balances, and procedures that make sure a company’s business is being conducted orderly and efficiently. They also ensure that the policies and procedures that are put in place are being adhered to. Internal controls are necessary for many reasons; however there are two primary goals. One is to protect the company and prevent theft, errors, fraud, and unauthorized use of resources and assets. The other is to detect and quickly reconcile any errors that may occur, and ensure that accounting and financial data is accurate and reliable. The Sarbanes-Oxley Act of 2002 was put in place as a result of the many corporate scandals that has happened. Under this act, companies are required to have an internal control system in place. If a random or scheduled audit discovers a company does not, they are subject to fines and possible jail time. SOX have affected internal controls in several different ways. In one way, it keeps a continuous watch over a company’s internal control system to ensure that the current methods continue to be reliable and effective. For example, over time, a company may change its computer system, its reporting method, or other ways pertaining to their finances...
Words: 1103 - Pages: 5
...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...
Words: 1146 - Pages: 5
...Internal Controls Internal Controls The University of Phoenix (Axia) XACC/280 Financial Accounting Concepts and Principles Renee’ Baker April 3, 2011 Internal Controls. Internal controls are a certain system that includes actions and methods with emphasizing organization’s security and intention to protect its assets and keep the accounting process trustworthy and precise (Weygandt, Kimmel, Kieso, 2008). Protecting a company’s assets is necessary because of the danger resulting from robberies or even employee theft. Improving or keeping the accounting process and records correct is an important factor also because of the risk of unintentional mistakes and intentional inaccuracy. Prior to 2002, companies were determining their own systems of internal control that could vary in intensiveness and sufficiency. However, after a few wide scandals like at Enron or Tyco, which involved deceitful and highly dishonest accounting practices, the government passed Sarbanes-Oxley Act of 2002 (SOX), which required organizations and businesses to follow and maintain a satisfactory internal control of a certain standard. Later, the Public Company Accounting Oversight Board was established which works on creating certain standards for auditors and regulates their activities. According to Weygandt, Kimmel, & Kieso (2008), the motto at time of passing SOX was ‘Better get those controls under control’, which was one of the most significant and important laws passed in...
Words: 291 - Pages: 2
...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...
Words: 575 - Pages: 3
...Internal Controls Name XACC/280 September 4, 2011 Instructor Internal Controls Internal controls are used to help companies reach their goals and different objectives. On a basis of transactions, internal controls are actions which are taken to complete certain objectives set out. In my paper I will be discussing two primary goals of internal controls, the effects on internal controls caused by the Sarbanes-Oxley Act of 2002, stock price drop due to internal control deficiencies, and internal control limitations. In internal controls there a few goals, but the primary two are to guard assets from theft and unauthorized use. The two goals help to increase accounting records with reliability and accuracy. Internal controls are brought into place within companies and organizations achieving a goal and avoiding undue problems while understanding the focused target without resource loss. By the implementation and use these controls, management is able to adapt within the economic changes and competitiveness while making sure regulations and laws are abided by. In business there is a simple fact of life which is, everyone is not an honest person. In business this includes employees along with customers to the organization and or business. Internal controls which are implemented in a correct manner can help the company identify cost consuming employees with unethical behavior and poor management style. There are times that mistakes happen and are a true mistake or error....
Words: 848 - Pages: 4
...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...
Words: 811 - Pages: 4
...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...
Words: 928 - Pages: 4
...Internal Controls XACC/280 April 8, 2013 There are rules that have to be followed when documenting financial information in accounting. Internal controls are methods used by a company to make sure their finances and accounting information meet the accurate level of integrity. Internal controls operate well when they are used in multiple levels of the company and also in different departments. A lot of companies have standard practices when it comes to financial integrity. Internal controls are also used to protect a company from incorrect data, fraud, and preventing anyone from abusing the finances. All financial records are being recorded and tracked to ensure accuracy. The Sarbanes-Oxley Act of 2002 was put in place because of the intentional inaccuracy of a company’s accounting practices and to make sure that high management and board of directors make sure they adhere to the procedures of internal controls. This act forces management to make sure that such controls are put in to place and maintained at all times. There are eleven titles within the Sarbanes-Oxley Act, but there are six that are very important when it comes to being compliant: * Section 302: Disclosure controls – this section mandates a set of internal procedures designed to ensure accurate financial disclosure. This basically states that the officers in the company are responsible for maintaining internal controls and have to present a report explaining their financial sheets. ...
Words: 917 - Pages: 4
...Running head: Internal Controls Internal Controls XACC 280 University of Phoenix Abstract To protect you must have a good security system in place internal controls are measures that insure that your company is protected against employee theft, unauthorized use, and external theft. Internal controls are barriers that are placed to deflect any possible theft, when these systems are correctly designed to fit a business’s format then it will do its job, there are many kinds of internal controls, from the simplest cash register to more advanced systems, but in the end their job is the same protect the company from theft. Internal Controls Internal Controls are an important part of an organization’s financial, business, procedures, and policies. They are measures taken to protect resources, and making sure that data is accurate and reliable in accounting as well as operations. Another purpose is to secure that compliance with the policies is being adhered to, and evaluating performance within the organization. All of an organization’s recourses are directed, measured, and monitored by Internal Controls. Internal Controls safeguard all of a company’s assets from fraud, theft or any type of robber. Another use of internal controls is the enhancement of accuracy within its accounting records by reducing errors and irregularities (unintentional or intentional). It is a check and balances type of protection and provides assurance of reliable operational and financial data, effective...
Words: 1044 - Pages: 5
...Internal Controls XACC/280 Internal Controls What if one of your fellow co-workers you found had been stealing from their cash register over a period of time so they did not get caught until now? What about a book keeper who had been keeping you accounting records and has been placing inaccurate information regarding transactions so they could pocket money for themselves? This is why companies have internal controls in place so it prevents certain situations from happening. Internal controls as defined in the reading are “all of the related methods and measures adopted within an organization to safeguard its assets and enhance accuracy and reliability of its accounting records” (Weygandt & Kimmel, 2008). In my thoughts internal controls is a method or process for a company to protect their assets and their employees and the company itself from liability. What internal controls are processes and methods that companies have to make sure there recording of their transactions are done properly so that the company does not get audited and in possible trouble. These are the two primary goals is to “safeguard assets and to make sure that there are accuracy and reliability of accounting records.” (Weygandt & Kimmel, 2008). The Sarbanes-Oxley Act of 2002 “is regulations passed by congress in 2002 to try to reduce unethical corporate behavior. It imposes more responsibilities on corporate executives and boards of directors to ensure those companies’ internal controls...
Words: 1018 - Pages: 5
...Internal Control XACC/280 08/14/2011 In this world, companies and businesses need a way of monitoring themselves, particularly in the accounting department. This is an act of preventative maintenance, ensuring that the financial reporting is reliable. Any successful business has a strong internal control model, without it, operations won’t run efficiently. A type of feedback, internal controls look at the quality and functionality of different aspects of a business ( eHow Money, n.d.). Its similar to the computer of an automobile, the computer receives feedback from all the different sensors and parts from the engine and the engine makes small adjustments to fuel and air ratio as well as tells the driver of any serious problems via check engine light and other dash indicator lights. A strong internal control model will ensure your company has the most reliable financial records along with having a greater unity between departments and great moral all together. The Sarbanes-Oxley Act of 2002 is a federal law which protects investors against fraudulent accounting activities. The main goal to lower and prevent accounting fraud, the Sarbanes-Oxley Act (SOX) introduced major changes in regulating in financial practices and corporate governance all together. The SOX was implemented after many major accounting scandals came to light, including Enron and WorldCom. The new rules and regulations of the SOX act either amend or supplement the existing rules and regulations. The...
Words: 865 - Pages: 4
...Internal Controls By Lorna Denney June 18, 2012 Tom Byers XACC/280 With the constant risk of embezzlement by dishonest employees, certain measures should be taken. Internal controls, which “consists of all the related methods and measures adopted with an organization,” (Weygandt, Kimmel, Kieso 2008) are needed to accomplish two primary goals. The first is to safeguard its assets from theft, robbery and any unauthorized use by any employee. The second is to “enhance the accuracy and reliability of its accounting records,” (Weygandt, Kimmel, Kieso 2008). This is achieved by decreasing the risk of error or unintentional mistakes and irregularities which are purposeful mistakes and falsifications in the accounting process. In 2002, one of the most important laws to be past in many years was the Sarbanes-Oxley Act. This law forces companies to keep a more watchful eye on internal controls. One of the most famous scandals of 2001 was the Enron scandal. Within a year’s time Enron, and I am paraphrasing Mark Jikling, who prepared a CRS report to congress on the financial downfall of Enron, went from being a multibillion dollar company with stocks at $80 plus price per share to a bankrupt company with shares dropping to $.70 price per share due to the lack of internal controls. This Act forces cooperate executives and board members to take responsibility and accountability to develop policies or principles of control over financial reporting. This Act also...
Words: 844 - Pages: 4
