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NCJRS Abstract

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NCJ Number: 64651 Find in a Library
Title: INTERNAL ACCOUNTING CONTROL - A MATTER OF LAW
Journal: JOURNAL OF ACCOUNTANCY  Volume:147  Issue:1  Dated:(JANUARY 1979)  Pages:56,58,60-64
Author(s): J M COOK; T P KELLEY
Corporate Author: American Institute of Certified Public Accountants
United States of America
Date Published: 1979
Page Count: 7
Sponsoring Agency: American Institute of Certified Public Accountants
Jersey City, NJ 07311-3881
Format: Article
Language: English
Country: United States of America
Annotation: THE SCOPE AND EFFECT ON INTERNAL ACCOUNTING CONTROLS IN PUBLIC COMPANIES OF THE 1977 FOREIGN CORRUPT PRACTICES ACT ARE EXAMINED WITH REFERENCE TO RECOMMENDATIONS FROM AN ACCOUNTANT'S ORGANIZATION.
Abstract: ALTHOUGH INDEPENDENT AUDITORS HAVE TRADITIONALLY BEEN CONCERNED WITH INTERNAL ACCOUNTING CONTROLS, SUCH CONTROLS ARE NOW A MATTER OF LAW. THE LAW RESULTED FROM POST-WATERGATE INVESTIGATIONS WHICH SHOWED THAT MANY CORPORATIONS HAD MADE QUESTIONABLE OR ILLEGAL PAYMENTS ABROAD. THE LAW'S ACCOUNTING STANDARDS REQUIRE PUBLIC COMPANIES TO MAINTAIN CONTROLS TO ASSURE THAT TRANSACTIONS ARE EXECUTED ACCORDING TO MANAGEMENT'S AUTHORIZATION, THAT ACCESS TO ASSETS RESULTS ONLY FROM MANAGEMENT'S AUTHORIZATION, AND THAT RECORDED ACCOUNTABILITY FOR ASSETS IS COMPARED WITH EXISTING ASSETS AT REASONABLE INTERVALS. THE LAW SPECIFICALLY ADOPTS EXISTING CONCEPTS OF INTERNAL ACCOUNTING CONTROL AND EXISTING GOOD PRACTICES. BECAUSE SUCH STANDARDS WILL NOW BE INTERPRETED BY THE COURTS, PRUDENT MANAGEMENT SHOULD REVIEW EXISTING CONTROLS AND PROCEDURES. THE LAW QUITE REASONABLY DEALS ONLY WITH ACCOUNTING CONTROLS AND NOT WITH ADMINISTRATIVE CONTROLS. A REPORT FROM A COMMITTEE OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) EMPHASIZES THE NEED TO ASSESS THE ACCOUNTING CONTROL ENVIRONMENT AND ORGANIZATIONAL STRUCTURE; THIS INCLUDES PERSONNEL, DELEGATION AND COMMUNICATION, BUDGETS AND FINANCIAL REPORTS, ORGANIZATIONAL CHECKS AND BALANCES, AND ELECTRONIC DATA PROCESSING SYSTEMS. THE COMMITTEE HAS ALSO SUGGESTED CRITERIA AND ILLUSTRATIVE EXAMPLES TO AID MANAGEMENT IN DETERMINING IF OBJECTIVES HAVE BEEN ACHIEVED. IT IS NOT CLEAR WHETHER THESE CRITERIA REPRESENT MINIMUM STANDARDS OR AN ILLUSTRATIVE EXAMPLE. CHANGES IN REPORTING PRACTICES MAY COME AS A RESULT OF THE CONDITIONS WHICH PROMPTED THE COMMITTEE'S FORMATION AND RECOMMENDATIONS. THE LAW'S EFFECTS MAY ULTIMATELY REACH NONPUBLIC COMPANIES. AREAS NEEDING FURTHER STUDY INCLUDE COST-BENEFIT ANALYSIS, PUBLIC REPORTING ON INTERNAL ACCOUNTING CONTROL, AND THE VIEWS AND RECOMMENDATIONS OF THE AICPA COMMITTEE. (CFW)
Index Term(s): Accountability; Bribery; Corporate criminal liability; Corruption of public officials; Criminal codes; Federal Code; Financial management; Foreign Corrupt Practices Act (FCPA)
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http://www.ncjrs.gov/App/publications/abstract.aspx?ID=64651

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