To properly assess the internal controls in place at CSSC, you have found that there are three major objectives that an entity should follow in designing an effective internal control system:
- reliability of financial reporting
- efficiency and effectiveness of operations
- compliance with laws and regulations
Explain what each of these mean and how they might be satisfied at CSSC.
These procedures were mandated as part of the Sarbanes Oxley Act of 2002. The reliability of financial reporting is a management report which assesses the effectiveness of the company's internal control over financial reporting (ICOFR). Reports about the quality of the internal control system have always been important, but formal reports by both management and auditors are new. The purpose of involving management in this formal reporting is clear to me: it includes management in the burden of proof for fairly presented financial statements. http://www.nysscpa.org/cpajournal/2006/1106/essentials/p32.htm
The subject of efficiency and effectiveness of operations is part of the review of internal control, and also part of ...
In a 441 word cited solution, the response is a comprehensive discussion of the major objectives. Included is the background and law for the necessity for an internal control system together with explanations of the components.