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Essay / Research Paper Abstract
This 5 page paper looks at the way in the Sarbanes-Oxley Act (SOX) can help a firm with its' internal controls and protect the cash that is in the firm. Both costs and benefits associated with the internal controls are discussed. The bibliography cites 2 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TESOXcash.rtf
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Unformatted sample text from the term paper:
of stock takes and inventory control, employee clocking systems, to risk assessments and real time accounting and budgeting controls. Therefore, internal controls are accepted as a part of everyday operational
business needs as well as associated with financial control. The introduction of the Sarbanes-Oxley Act has increased the need not only for internal control, but for transparency of that control.
Moves that increase the level of internal control, and force companies to examines their internal controls has the potential to safeguard the cash of a company by detecting potential weaknesses
and preventing them from having a negative impact on the company, either purposefully, such as facilitating circumstances that allow for fraud, or as a result of poor management.
The Sarbanes-Oxley Act has come into an environment where companies such as Enron and WorldCom have failed and demonstrated that their internals controls were
not operating and that even the reporting was not accurate. The aim of the act is stated as "to protect investors by improving the accuracy and reliability of corporate disclosures
made pursuant to the securities laws" . The main section of the act that is likely to impact on internal controls and
protecting cash come under section 404 (Bryan and Lilien, 2005). Under this section both the external auditor and the internal management have to make a report on the level
of adequacy of the internal controls that are in place in a firm (Bryan and Lilien, 2005). This affirms "the responsibility of management for establishing an adequate internal control
structure and procedures for financial reporting". This alone may not make a difference to the procedure, as it is a reporting process (Damianides, 2004). However, it is a process which
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