Question

Discuss the impact of Sarbanes-Oxley on a company’s internal controls. Be sure to define internal controls and discuss the basic principles for assessing internal controls.

Answer 1

impact of Sarbanes-Oxley Act on a company Internal control t o . Sarbanes-Oxley Act section 404 (b) requires that the management of public companies assess the effectiveness of the internal control of issuers for financial reporting. This section requires a publiclly - -held company's auditor to attest to, and report on management's assessment of its a internal controls This section has led to improked financial reporting and greater transparency : This requires public companies to perform extensine internal control tests and include an internal control report with their annual audits - Testing and documenting manual and automated controls in financial reporting erures requires enosmous effect and invol? ment of not only external accountants but experienced IT personnel. The compliance cost is especially burdensome for comban that heavily rely on manual con The Sarbanes-Oxley Act has encous companies to make their financial seh efficient, centralized and automated ng more au consome for companies i financial reporting more

with governance managem Internal control & The process designed, implemented - and maintained by Those charge governance management and other person to provide reasonable assurance about the achievement of an entity's objectives with regard to reliability of financial reporting, effectiveness of operations, efficienu of operations, safeguaiding of assets and compliance with applicable laws and regula- - tions. Basic principala for assesing Internal - Control are (i). Establish Responsibilities (ii) Maintain Records contri non (iii) Segregate of Duties in (iv) Mandatory Employee Rotation (v) Use Technological controls" Cvil Perform Regular Independent Reviews Culi split Retated Party Responsibility