Internal Controls Over Financial Reporting

Abstract

Financial reporting is a way that management uses to provide the necessary information to interested parties. As a result, these information must be accurate and reliable in order to be useful. Therefore, management is required to have in place an effective internal control system that prevents and detects any fraud or misuse of the assets. The effective internal control system enables the management to provide reasonable assurance about the financial reporting. Control systems help the management to assure the effectiveness and efficiency of company's operations and its compliance with regulations. Thus, the control system helps the management to achieve its goals and to provide financial information that is reliable. In order to implement good internal controls, companies must have control activities implemented by the internal control department. These activities help to prevent, detect misuse and assure the effectiveness and efficiency of the operations. Since management is the body who is responsible for the financial reporting, therefore they are responsible of having effective internal control system to help them achieve their goals.