Ch[1][1]._4_Notes

Ch[1][1]._4_Notes - Internal control- is the organizational...

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Internal control - is the organizational plan and related measures that an entity adopts to: 1. Safeguard assets 2. Encourage adherence to company policies 3. Promote operational efficiency 4. Ensure accurate Controller - the chief accounting officer of a business Audit - a periodic examination of a company’s financial statements and the accounting systems, controls, and records that produce them Sarbanes-Oxley Act (SOX) - revamped corporate governance in the Unites States and also sweeping effects on the accounting profession. A few SOX provisions: 1. A newly created body, the Public Company Accounting Oversight Board, oversees the work of auditors of public companies. Public companies are those that sell their stock to the public. 2. Accounting firms may not both audit the financial statements of a public client and also provide certain consulting services for the same client. 3. The same person can serve as the lead auditor on a public client for no more than 7 years. That person can resume prior audit duties only after a 2-year time- out period. 4. Public companies must issue an internal control report, and the outside auditor must evaluate the client’s internal controls. 5. Stiff penalties await violators-25 years in prison for securities fraud; 20 years for destroying records; and 20 years for a CEO or a CFO making false sworn statements. Internal Control System: 1. Competent, Reliable, and Ethical Personnel 2. Assign Responsibilities (treasurer manages cash and the controller is in charge of accounting)
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Ch[1][1]._4_Notes - Internal control- is the organizational...

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