ACC 290 Week 5,
The control environment is the basis of the entire control system that the organization is establishing. The control environment is the value that is placed on integrity and the knowledge that unethical activity will not be tolerated. It is management’s responsibility to express behavior and attitude that enforces this ethical behavior. The control environment affects the internal control by setting a basis of control activities that safeguard assets, enhance accounting reliability, increase
The controls that should be in place to protect a merchandiser in a cash rich environment are –
Establishment of responsibility
Segregation of duties
Independent internal verification
The Sarbanes-Oxley Act (SOX) requires that all publicly traded U.S. corporations are required to sustain a satisfactory structure of internal controls. In addition to internal controls each organization must be able to confirm their compliance by an independent outside audit. SOX came about because of public outrage to lack of corporate integrity and accounting dishonesty. Major corporations such as Enron and WorldCom were dishonestly reporting accounting figures to investors and such dishonesty led to the major losses in investor’s money. SOX requirements have improved
- Sales: $181,500
- Cost of goods sold: $41,200
- Gross profit: $38,000
- Operating expenses: $17,900
- Operating expenses: $8,500
- Net income: $63,400
Next Problems Included as well
Financial Reporting Problem, Part II
PepsiCo is a highly known beverage distributor. The cola started in the late 1800s in a drugstore, and its original name was “Brad’s Drink.” In 1898, cola introduced “Brad’s Drink” to the market. Then, later change the name to Pepsi. It is a large company that has numerous assets and liabilities. Many investors and creditors would be willing to work with this company because they run a good business.
Currents assets are very significant to companies like PepsiCo. In the balance sheet, “current assets are assets that a company expects to convert to cash or use up within one year or its operating cycle, whichever is longer. For most businesses, the cut off for classification as current assets is one year from the balance sheet date” (Kimmel, Weygandt, & Kieso, 2011, p. 49). The company can use these assets to support its routine operations. For example, the company can use the assets to pay their current expenses.
The common type of current assets consist of cash, marketable securities, inventory,
Week Five Reflection Summary
The team members’ knowledge continues to grow. Week five mainly covered the effect of the Sa Sarbanes-Oxley Act of 2002 on internal controls.
The Sarbanes-Oxley Act of 2002 was put into place because of shady accounting practices. One of the biggest accounting scandals was the Enron scandal in 2001. Enron was
Week summary attached as well !!!