Question

As a result of Sarbanes-Oxley, companies have done a lot to improve their internal controls to help protect themselves from both internal and external thieves. What have you done lately to shore up your own internal controls? Identity theives aren't going away, just getting more sophisticated.

Answer 1

Sarbanes-Oxley Act 2002 was passed to bring in more transparency in financial repoting and curb down fraudulent transactions. Effective Internal control has indeed helped the Companies in dealing with internal and external thieves.

The control is basically is the best practice to ensure that the business processes are safe, are done with proper authorisation and performed in the most prescribed manner. For example-: Implementation of maker and checker control is very common and effective method that work as monitoring control. Below are some of the internal controls which helps in detecting fraudulent transactions-:

a) Now-a- days, one of the common mode of fraud is through stealing credit card information, protection of confidential data, spam emails, loss of data in servers etc. These types of fraudulent transactions can be controlled through keeping the data safe and secure. Locking the file cabinet or encrypting the file may be implemented as a effective internal control.

b) Employees can misappropriate the organisation's money through transferring it into their own account. Segregation of duties in accounts payable department is one of the control to deal with this situation. Teeming and lading is another risk which can be protected from the thieves.

c) Virus outbreak in the Computer can steal the personal data. Having anti-virus protection in the system can combat this situation. It will stop any intruder from attacking and stealing the data.

d) Human erros sometimes is very fatal to the organisation. By having strong internal control reconciliation of Bank statement with general ledger of bank identifies and checks the flow of money in bank and books.

Above internal controls if effectively working can cover of the risk of theft.