Internal Control Case Study

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Internal Controls Since the implementation of SOX, companies are required to establish effective and efficient internal controls in order to be in compliance with the SEC requirements (Jahmani & Dowling, 2015, p. 129). According to COSO internal control is defined as “a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of the following objectives: 1. Reliability of financial reporting, 2. Compliance with laws and other regulations, 3. Efficiency and effectiveness of business operations, and 4. Protection of property” (Kanagaretnam et al., 2014, p. 30 & Kapic, 2013, p. 63). Additionally, Kapic notes internal controls contain policy and procedures that assist the company and management with smooth operations of all daily business …show more content…

63). Operational objective consists of guaranteeing the productivity and efficiency of business operations. This means companies must implement a system of internal controls, that consists of exceptional management and already having a prearranged operational and strategic business objective (p. 63). The information objectives of internal controls consist of guaranteeing dependable financial data within the business decision-making process (p. 63). In addition, the information objective involves the beginning process of updates, provides reliable, and pertinent financial information that is used as guidelines for internal and external stakeholder decisions (p. 63). Finally, the acquiescence or concordance objective defines how the internal control structure is in agreement with the company’s general business strategy and processes, decisions, and additional internal control regulations currently in place (p.

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