Management reports on internal controls.
Journal of Accountancy › Vol. 190 Nbr. 4, October 2000
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Management reports on internal controls.
What do they say about your company?
EXECUTIVE SUMMARY * PUBLIC COMPANIES INCREASINGLY INCLUDE management reports on internal controls in their annual reports even though no regulators require them. * SINCE ACCOUNTANTS AND AUDITORS ARE DIRECTLY involved in auditing financial statements and reviewing internal controls, they are in a good position to suggest what degree of reporting is appropriate. * MANAGEMENT REPORTS ON INTERNAL CONTROLS provide a unique opportunity for management to discuss issues and concerns not communicated elsewhere in the annual report. * SINCE THESE REPORTS FIRST STARTED APPEARING, there is a growing consensus as to what the contents should include: financial statement presentation; purpose, nature and components of internal controls; and the roles of internal audit, the independent auditor and the audit committee. Also, unique programs can be emphasized. * COMPANIES ARE CAREFUL TO POINT OUT the inherent limitations of internal controls. A significant number of the companies studied acknowledge that "the systems are designed to provide only a reasonable assurance of meeting stated ob...See the full content of this document
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