Internal controlling, in accounting terms, refers to internal (within the company) analysis of all activity so that effective goals and objectives can be set for company performance. All of the company's activities, whether it is financial or operational, is monitored, recorded and assessed in order to create the most beneficial goals. This process is very important in accounting to ensure that the company is in good financial position to remain in operation and to detect fraudulent behaviour early on. If the fraud is not detected early enough, it can lead to serious repercussions. Internal controls within a business are referred to as operational controls, as they are attempting to control activity relating to revenue. Controlling essentially produces budgets, objectives and plans for the company. Qualified accountants are hired as employees (opposed to external auditing) to analyze the data and create these reports.
The Sarbanes-Oxley Act in 2002 required that companies in the United States improve current internal control processes in order to produce more specific reports. The goal of this law was to protect the interests of potential investors and other entities that may require accurate and ethical financial statements.