Changes in Company’s Responsibilities for Internal Control

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Author’s Note

MANAGEMENT ACCOUNTING1
Table of Contents
Change in Company’s Responsibilities for Internal Control.....................................................2
Required Changes in Internal Control Once the Company Become the Public Company........3
References..................................................................................................................................5

MANAGEMENT ACCOUNTING2
Change in Company’s Responsibilities for Internal Control
It needs to be mentioned that there have been certain major changes in the internal
control of the companies due to the introduction of both the Sarbanes-Oxley Act and PCAOB
Auditing Standards No. 2201. These changes in responsibilities are discussed below.
Sarbanes-Oxley Act – There will be certain changes in the company’s responsibilities for
internal control due to comply with the Sarbanes-Oxley Act. As per the requirement of this
act, the company is now needed to include a Report for Internal Control for all the financial
reports with the aim to ensure that the financial data of the company are accurate and there is
adequate control for safeguarding these data. Additional requirement is the year-end financial
disclosure report (Chhaochharia et al., 2016). This act states that it is needed to have an
additional SOX auditor for reviewing control, policies and procedures at the time of Section
404 audit. The new responsibility will be to monitor, log and audit certain parameters as per
SOX 302, 404 and 409; they are internal control, network activity, database activity, login
activity, account activity, user activity and information access. The changed requirement is
the auditing of the internal controls and procedures through the use of framework such as
COBIT. Since review of the internal control of a company is the largest component, changed
responsibility is to audit the components of internal control such as IT security, access
controls, data backup and change management (Willits & Nicholls, 2014).
PCAOB Auditing Standards No. 2201 – This particular standard provides the requirements
as well as directions that can be applied at the time to engaging in the audit of management’s
assessment regarding the effectiveness of internal control over financial reporting. As per this
audit standard, the changed responsibility of the company is not to consider the internal
control effective in case there is one of more than one material weaknesses exist in the
internal control; and it is because of the fact that effective internal control over financial