Organization’s financial and business policies and procedures are classified as Internal Controls. These controls consist of all measures by providing protection for the organization by ensuring accurate and reliable data, securing policies and evaluating performance. By providing Internal Control this information they can protect the assets of the organization from fraud, theft or any other criminal activities. Internal Control also enhances the financial records by reducing errors and regularities from either unintentional or intentional practices. Every organization big or small should have Internal Controls safeguarding their every move in the business world.
In 2002, Senator Paul Sarbanes (D-MD) and Representative Michael Oxley (R-OH) composed an act, Sarbanes-Oxley Act (SOX), which then was signed by President George W. Bush in July. The SOX is compiled of eleven titles and a set number of non-negotiable deadlines for companies to adhere to. SOX was created to protect investors from the large amount of scandals and bankruptcies in 2000. Companies like Enron, Tyco International, World Com and Adelphia collapsed which cost investors billions of dollars. With SOX the investors would have not lost as much but they still would have lost some. Sox just insure that the financial records are accurate and reliable for investors to see how the companies are doing if they chose to invest in them. SOX is only applicable to publicly traded companies, but some states are pushing large non-profit organizations to be classified under the act as well. In some States, failure to complied with SOX can and will lead to fines, imprisonment and other penalties that they see fit.
When an organization announces any kind of deficiencies within it shows a lack of management. When there is a lack in management the organization will lose investors which cause lost in