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The Sarbanes-Oxley Act Of 2002 (SOX)

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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,

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1. Dodd-Frank Act: The Dodd-Frank Act which is known in full-form as Dodd-Frank Wall Street Reform and Consumer Protection Act is a type of United States federal law which will define regulation of the financial industry within the perimeter of the federal agencies. The legislation that was defined way back in July 2010, which can avoid the significant financial crisis by defining new financial regulatory methodology which can insist clarity and authorization while defining rules for protecting the financial data of several users. The Dodd-Frank Act is adopted by most of the investment banking organizations across the world. 2.

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Accounts are reported on the balance sheet as Assets, however due to the timing in which goods and services are depleted, deferred accounts are reported as a noncurrent asset and the prepaid expenses are reported as a current assets (Averkamp, 2016). Failing to record pre-paid and deferred accounts properly could result in the inaccurate report of assets which would result in under or overstated income in the subsequent financial

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This memorandum highlights significant portions of Statement on Auditing Standards (SAS) No. 115 Communication of Internal Control Related Matters Identified in an Audit and answers some questions frequently asked by accountants about SAS 115 ("The American Institute Of Certified Public Accountants", 2015). SAS 115 Highlights Here are some highlights of SAS 115. Applicability (SAS 115, 2015, para. 01). Definitions. A material weakness (SAS 115, 2015, para. 06).

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An example of improving such a control is requiring a sales manager to approve any customer returns for store credit. As well as safeguarding their assets, and keeping accounting information reliable and accurate, Bevmo should regularly evaluate operating performance and efficiency. Missing items can be identified if documents are pre-numbered. Another accounting control is checking that cash from a point of sale terminal matches that of sales recorded on the same register. They must pay careful attention to the costs and benefits of their internal control system, and have a CPA independently check the company’s accounting records periodically, in case they find ways of

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Management conducted an assessment of the effectiveness of the internal control based on the criteria set forth by the Committee of Sponsoring Organization or the Treadway Commission in Internal Control. Based on that assessment, management has determined that the internal controls are effective. In addition, Lockheed Martin’s independent registered public accounting firm has also reviewed the internal controls and also found them to be

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The book states that internal control procedures should be designed to prevent errors and fraud, maintain the accuracy and completeness of financial information, and provide reasonable assurance that the company is achieving its objectives. Dave and Buster’s uses a variety of accounting and organizational internal control procedures to ensure the accuracy and security of its financial records and activities. The company’s accounting system is designed to ensure that the company’s financial records accurately reflect its financial activity and to protect against fraud and errors. which means Dave and Buster’s relies on a series of internal controls, such as separation of duties, authorization and approval of transactions, and physical control of assets (Dave & Buster’s, 2018). At the organizational level, Dave and Buster’s has various internal control procedures in place.

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This is because a lessee will be required to recognise a right-of-use asset and liability for all leases more than 12 months. Information about lease liabilities has predictive value and provides information about minimum future cash outflows in relation to leases. Although the disclosure for future lease payments required by leasing has analytical value but the information is not useful as the information provide under the proposals because is showing an undiscounted basis. (Snapshot, 2013) Opinion for this is after revised leasing, in financial report can let user more understand information but they also need to determine the information is true or not. Recommendation is they need to recognise a true and fair information to user so that will not make a wrong decision in

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Designing and using management control systems can play a vital role in dealing with cybersecurity issues that have emerged along with the development of the Internet. Effective management control systems would decrease a company's probability of suffering major damages from cybersecurity breaches. Learning from and extending on the pre-existing agency-based capital budgeting research, this research validates the significance of the analysis of management accounting controls to issues developing in the cybersecurity field. The main result is that businesses can use an information security audit along with alterations to the compensation payments to the agent and the investment decision guidelines, to alleviate a Chief Information Security Officer’s innate empire building preferences. The research also recognizes further research areas where management accountants with expertise in management control systems can be helpful to the academic works and practice surrounding cybersecurity problems (Gordon, Loeb, Sohail, Tseng, & Zhou,215-241).

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Accounting Policy Compare and Contrast Although Marks and Spencer and Mulberry are all fashion industries under retail channels that follow the rules of IFRS for auditing. In order to identify their similarities and differences in their accounting policies, the following six categories are compared and contrasted: Lease In terms of the financial lease, both Mulberry and M&S stated in their first paragraph the definitions of financial lease as “transfer substantially all the risks and rewards of ownership to the lessee” , but M&S disclosed more details of over how the financial lease are depreciated which are “charged to the income statement on the same basis as owned assets, unless the term of the lease is shorter…” and treated “as consisting

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This Act enhanced standards for corporate accountability, responsibility, and financial reporting transparency. SOX greatly emphasizes an organization’s internal controls, requiring an internal control report in the annual report. The new requirements placed greater demands on internal control. The COSO internal control framework passed in 1994 outlines three objectives of internal control as: effectiveness and efficiency of operations; reliability of financial information; and compliance with applicable laws and regulations. Hence, the internal control function becomes the key to assess the effectiveness of utilizing financial resources by identifying waste, inefficiencies and fraud in budget items and make the organization

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In order to have a tighter control on financial, IBC must ensure that all records are kept under proper control and cannot be misapplied, whether on purpose or by mistake. Ensure that all expenditures incurred are properly authorised and accounted for. Another way that IBC can use to have tighter control on financial, is to use a mechanised accounting system. It is great time saving for business.

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2.5 When A System Of Internal Control Is Believed To Be Effective Both applied internal control systems like COSO framework and laws governing the issue of internal control systems namely Sarbanes-Oxley Act (SOX) are interested in expressing a professional opinion with respect to the effectiveness of internal control systems. On one side, COSO framework considers the board of directors and the judgment practiced by the board of directors and top management within the boundar¬ies established by laws, rules, regulations, and standards as the main factor effecting the design, implementation, and the assessment of the effectiveness of internal control systems. However, this practiced judgment is exhibited in the form of obtaining reasonable assurance relative to the application of such internal control system within the entity structure in a manner that its operations are functioning effectively and efficiently when external events are either considered likely or unlikely to have

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Brief history of COSO The Committee of the Sponsoring Organizations of Treadway Commission (COSO) was established by five private organizations in the United States. COSO is devoted to monitor the executive management and to control entities on the relevant features of the organizational leadership, the internal controls, the business ethics, internal control, the risk management, the financial reporting and the fraudulent activities. COSO has come up with an internal control model in which the companies and other organizations can evaluate their individual control systems. The COSO and the Sarbanes-Oxley are related in that the Sarbanes-Oxley requires companies to use the framework that was set by COSO.

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The article is written by Daniel Draz, M.S., CFE. The article focused mainly on strengthening internal controls. Strong internal control is paramount in preventing fraud. Besides, the company’s attitude towards fraud, internal controls and an ethical organizational culture are equally significant too. Today, companies with strong internal control also not exceptional from fraud.

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In Samsung company, the internal control system is ineffective because of the adequate division of responsibilities among employees didn’t exist among those who perform accounting procedures or control activities and those who handle assets. For instance, John Y. Lee created fake invoices, purchase orders and payment applications to make it come out that Samsung Corning Precision Co. Ltd had ordered and received services from Engelhard Supple Co. John Y. Lee used the fake documents to cause Samsung America Inc. to payment to an ESC bank account that John Y. Lee

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