Explain the importance of internal control to a business and the significance of the Sarbanes-Oxley Act of 2002.
- The Sarbanes-Oxley Act of 2002 required publicly traded companies to improve the documentation and functioning of their internal controls.
- Management must now render an opinion on the efficiency of the company's internal control system. A strong control environment is a must for companies.
- Auditors also must increase their documentation and understanding of the internal controls of their clients.
- Significant amounts of resources have been devoted to comply with the provisions of Sarbanes-Oxley.