Internal Control Essay Example | Topics and Well Written Essays - 250 words

Internal Control - Essay Example Section 404 of the Sarbanes-Oxley Act states that all annual financial reports must include an internal control report stating that management is responsible for an adequate internal control structure and an assessment by management of the effectiveness of the control structure (Sarbanes-oxley-101, 2015). The creation of SOX established new standards for internal controls that corporations must abide to, while at the same time ensuring that upper management became accountable for the actions of the company. The new internal control requirements must be monitored by upper management including the CEO and CFO who must personally sign the report making them liable in case these internal controls fail (Kmpg, 2004). This raises their accountability by 100% in comparison with the past. The act also requires a statement from the public company that audited the financial statement that it has issued an attestation report on managements assessment of the internal control of the company (Sec, 2008). Peavler, R. (2015). The Sarbanes-Oxley Act and the Enron Scandal – Why are they Important. Retrieved January 6, 2015 from http://bizfinance.about.com/od/smallbusinessfinancefaqs/a/sarbanes-oxley-act-and-enron-scandal.htm Sec.gov (2008). Final Rule: Managements Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports. Retrieved January 6, 2015 from