Fundamental Principles of Accounting

The accounting and reporting guidelines were properly introduced and established in terms of internal control . As Sarbanes-Oxley Act was implemented on some corporations , there has been a drastic change in their operations . Executives and Board of Directors of few companies who have adopted the said Act , had benefited from it . They have applied preventive controls on their operations , which in effect , eliminated mistakes and errors as well . One example is the proper assignment of responsibilities from each employee in a particular department . Another category of internal control is the detective category , which

br specifically identify inaccuracy and irregularities that once occurred In a certain company , transparency of financial information and operation is a must . In to accomplish this criteria , strict internal control shall be observed through cross-checking of s reconciliation of data and data verification as well . Most companies spend money to hire external auditors to do all the checking , in result all misstatements , over valuation and under valuation of resources or of the company 's financial statements are put into alignment after thorough audit checking . If a company can validate or prove that they are practicing strong control environment then auditors would do less substantiation or confirmation of internal tests , then most likely the company would spend less for compliance cost

The Sarbanes-Oxley Act faced a lot of criticisms mostly from various large corporation owners and political leaders as well . Some said that this Act contributed effects in the industry such as it will raise compliance cost and expenses . It could increase lawsuits to some and even distract company executives from other important tasks instead of spending lots of time going over their financial statements which results to less time creating , innovating and leading . Small businesses are greatly affected of this Act since it requires publicly traded companies to hire third party auditors which basically the cost is the main factor . Although Sarbanes-Oxley Act had somehow contributed to the protection of companies from possible fraud , protection of investors and stakeholders from any wrong decisions , and although its implication is good in nature , companies are still concerned how the Act has been passed by the Congress so quickly without enough investigation...