Corporate Compliance Report
Corporate Compliance Report
Over the past decade, the nation’s eyes have been opened to the scandalous world of business which has compromised the confidence of the public in the corporate world. This image has triggered a larger emphasis on internal control systems and audits. In section 404 of the Sarbanes Oxley Act, publically traded organizations are required to include a report about the effectiveness of controls in their annual form 10-k. These controls are the means an organization uses to ensure that business functions are performed in compliance of the law and procedures of the company. “Internal control is broadly defined as a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives,” (COSO, 2008).
In 2002, the Sarbanes Oxley Act (SOX) was enacted in response to the scandals surfacing in the corporate world. The intention of SOX is to restore the confidence of the public and investors through the enhancement of corporate governance, improving the oversight of auditors, focusing the attention of companies and auditors on internal controls, and strengthening the penalties for noncompliance (Deloitte, 2004). Internal controls are essential for establishing corporate governance. In sections 302 and 404 of the Sarbanes Oxley Act, emphasis is placed on the importance of internal controls on corporate governance within an organization. In order to address internal control issues, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued control guidelines called the Internal Control-Integrated Framework. “COSO was formed in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, an independent private-sector initiative which studied the causal factors that can lead to fraudulent financial reporting. It also developed recommendations for public companies and their independent auditors, for the SEC and other...
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