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Internals controls in accounting and finance

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1. Would better internal controls have prevented any of the biggest corporate scandals over the past few years? Give examples and explain.

2. Is it ethical to maintain the minimum required internal controls, or does an organization have a responsibility to provide more than the minimum? Why or why not?

3. If internal controls make so much business sense, why was it necessary to pass Sarbanes-Oxley into law?

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Internals controls in accounting and finance

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1. Would better internal controls have prevented any of the biggest corporate scandals over the past few years? Give examples and explain.

Yes, better internal controls would have prevented or at least reduced the chances of big corporate scandals, such as those of Enron and Worldcom. For example, if better internal controls would have been present, the manipulations done by Worldcom's CEO Ebbers would have been done much earlier. The recent series of high-profile financial failures demonstrates board ineffectiveness in overseeing control systems. At Enron, for example, the board appears to have been either unwilling or unable to fulfill its responsibilities. Although it's possible that Enron's board ...

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Sheetal Jain, PGDM
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  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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