AB 116 Unit 1 Discussion Accounting Internal Control

Internal Control




Date due:

Internal Control

Internal control is a set of measures, policies are procedures that are put in place by management to ensure that there is sufficient assurance that the activities of a company (public) are according to laid down laws and regulations, that the operation are effective and efficient. It also ensures that there is reliable financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002 or section 404 as it commonly referred to requires that management and independent auditors give an account or report about the effectiveness of internal control over financial reporting. This helps to prevent financial scandals that have happened in the past by testing the effectiveness of accounting systems put in place.

The section requires that internal control reports have a detailed account of the scope and adequacy of internal control structures and procedure to be able to provide comprehensive financial reports. Section 404 also requires that internal reports should give an assessment of the internal control structures and procedures and this report should be attested to and verified by independent auditors or a registered accounting firm.

Public companies such as Apple Inc., are required according to Sarbanes-Oxley act of 2002 to not only report but give a detailed account of how effective their internal control procedures and structures are.


Dobre, M. (2011). Section 404 of the Sarbanes-Oxley act and its capital market effects. Afr. J. Bus. Manage. AFRICAN JOURNAL OF BUSINESS MANAGEMENT.

Section 404 (b) of Sarbanes-Oxley act of 2002. Retrieved from:http://www.aicpa.org/advocacy/issues.

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