Essay on Finance and Internal Control - 976 Words

ACCT301 Week 2 Homework 1. In two to three paragraphs, describe the Sarbanes-Oxley Act and why it is important to the accounting profession. (15 points) The Sarbanes-Oxley Act was passed in 2002 by Congress after a series of scandals involving companies such as Enron, WorldCom, and Tyco. This was passed because of shady transactions and misrepresented financial data which caused shareholders to lose millions of dollars and their trust in investing in public companies. It was passed to create new rules of accountability and accuracy for public companies. It is important to the account profession because companies were required to have met certain conditions or face the consequences. The Act requires all public companies to†¦show more content†¦Control Activities: This refers to the organization’s policies and procedures which help ensure that the necessary actions are taken to speak out and address potential risks. Information and Communication: This focuses on the â€Å"nature and quality† of information that is needed in order to effectively control the systems used to develop such information and reports used to communicate effectively. Monitoring: This involves assessing the quality and effectiveness of the company’s internal control process over time. This includes assessing the design and operation of controls, the compliance with polices and procedures, and making sure everything is done according to the rules. 3. Describe the relationship between the Sarbanes-Oxley Act and COSO. (10 points) There are some close relationships between the SOX and the COSO. The COSO would essentially the framework for the SOX which took effect in 2002, forcing businesses to comply with different rules, policies, and producers. Though SOX is more rigorous about setting these standards and have implemented more guidelines, the COSO was essentially what the SOX Act used in order to stop fraud within a business setting. 4. Tom Jackson is a CPA who really likes to go to Las Vegas, play poker, and bet on football games. Tom knows that the accounting profession disapproves ofShow MoreRelatedFinance and Internal Controls Essay697 Words   |  3 Pagesï » ¿Finance and Investment Controls Just as all cycles discussed in this proposal the finance and investment cycles are vital to the return of borrowed assessments and the value (and longevity) of the company. Corresponded or intertwined to that of the investment cycle and business cycle, the Finance cycle deals with the company’s ability to pay back investors and entities that have facilitated finance to the company’s mission and vision. 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