Internal Controls

Question 1

What are “compliance objectives” in regards to the internal control systems?

Answer 1

compliance with applicable laws and regulations

Question 2

What are “reporting objectives” in regards to the internal control systems?

Answer 2

reliability of reporting. They include internal and external financial and non-financial reporting

Question 3

What are “internal control systems”?

Answer 3

policies and procedures established by management ato provide reasonable assurance that the company’s objectives are being met in three areas:
(1) effectiveness and efficiency of operations
(2) reliability of financial reporting,
(3) compliance with applicable laws and regulations.

Question 4

What are “operations objectives” in regards to the internal control systems?

Answer 4

effectiveness and efficiency of the entity’s operations, including financial performance goals and safeguarding assets against loss

Question 5

Summarize Sarbanes-Oxley Act of 2002 section 302

Answer 5

requires the principal executive and financial officers to certify that they are responsible for establishing and maintaining the system of internal control over financial statements​

Question 6

Summarize Sarbanes-Oxley Act of 2002 section 404

Answer 6

requires management to produce an internal control report acknowledging that management is responsible for:​
-Establishing and maintaining an adequate internal control system and procedures for financial reporting​
-Assessing the effectiveness of these controls​

Question 7

How does the Sarbanes-Oxley Act of 2002 apply to internal control systems?

Answer 7

Under publicly traded companies, it increases responsibility to ensure reliable financial statements. Requires an internal control report acknowledging the internal controls effectiveness. Designed to prevent top management from denying knowledge of deceptive reporting.