From the course: Finance and Accounting Tips

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Internal controls

Internal controls

From the course: Finance and Accounting Tips

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Internal controls

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- To help ensure that financial reports are accurate and to prevent problems that land a company as a headline in the Wall Street Journal, internal controls have been built into financial reporting system structure of most organizations in the United States. The responsibility for establishing and maintaining internal controls belongs to a company's management. All companies whose stock is publicly traded are required by law to keep records that represent that the firms transactions are accurate and fair. In addition, they must maintain adequate systems of internal accounting control. Following the rash of reported financial statement frauds in 2001 and 2002, congress passed the Sarbanes-Oxley Act, also known as Corporate Responsibility Act of 2002. This far sweeping corporate reform act requires, among other things, that every company's annual report contain an internal control report, which must one, state the responsibility of management for establishing and maintaining an adequate…

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