chaptertitle.pptVIP

(continued) ? The Act requires a public company’s independent auditor to issue an opinion on the effectiveness of the company’s internal control over financial reporting to accompany management’s assessment, and both are included in the company’s annual report. ? The Act establishes severe penalties for certain behaviors, such as: Up to 20 years in prison for altering or destroying any documents that may eventually be used in an official proceeding. Up to 10 years in prison for retaliating against a “whistle blower.” ? Let’s take closer look at internal control. Internal control is a process designed to provide reasonable assurance that objectives are being achieved. A preventive control deters undesirable events from occurring. A detective control detects undesirable events that have already occurred. This slide contains three examples of internal controls for financial reporting. Each control is described and classified as preventive and/or detective. This slide contains four additional examples of internal controls for financial reporting. Once again, each control is described and classified as preventive and/or detective. Internal controls cannot guarantee that objectives are achieved because: Even well-designed internal control systems can break down. Two employees may collude to circumvent the control system. 3. Senior leaders may manipulate financial results by intentionally overriding prescribed policies and procedures. End of Chapter 1. Human resource management majors are also involved in controlling activities. Is our employee retention rate exceeding our goals? Are we meeting our goal of completing timely performance appraisals? Human resource management majors are involved in decision making activities. Should we hire an on-site medical staff to lower our healthcare costs? Should we hire temporary workers or full-time employees? The IMA estimates that more than 80% of professional accountants in the United States work in non-public accou