Control Procedures Internal controls are the main way that fraud and unintentional errors are prevented, detected, or corrected in a company (Harrison Jr. et al., p. 197). These controls are implemented by management as well as the board of directors that consists of five main objectives: safeguard assets, encourage employees to follow company policies, promote operational efficiency, ensure accurate, reliable accounting rectors and comply with legal requirements such as the SEC, IRS, etc (Harrison Jr. et al., p. 197). All public companies must develop a system of internal controls and auditors must examine these controls and report on their reliability (Harrison Jr. et al., p. 197-198). Additionally, the Sarbanes-Oxley Act of 2002 (SOX) …show more content…
This provides reasonable assurance that the reliability of their financial reporting is in accordance with generally accepted accounting principles or GAAP (Starbucks Corp 2016, p. 87). Controls include the maintenance of records that reasonably detail accurate and fair reflections of transactions; transactions are recorded as needed for the preparation of financial statements; receipts and expenditures are made with management authorizations; and that unauthorized acquisition, use or disposition of company assets that might have a material effect on financial reporting is prevented or detected in a timely manner (Starbucks Corp 2016, p. 87). Review of these controls that were established in Internal Control – Integrated Framework which reviews documentation of controls, evaluation of their effectiveness and testing of controls, management determined that their internal control over financial reporting was effective as of October 2, 2016 (Starbucks Corp 2016, p. 87). Additionally, these controls were audited by an outside company, Deloitte & Touche LLP and found to be effective as shown in Starbucks’ Fiscal 2016 Annual Report (Starbucks Corp 2016, p. …show more content…
et al., p. 513). This allows the lessee to use the asset without the larger up-front payment usually required to purchase the asset (Harrison Jr. et al., p. 513). Leases can be broken into two categories: operating and capital leases (Harrison Jr. et al., p. 513). WHY IS THIS REQUIRED??? Inclusion of leases on the balance sheet is a benefit to investors as it standardizes their presentation and impact on financial reporting, and as with previously discussed topics, allows for easier comparison between companies (Eavis, P,