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Internal Controls and CollusionKirill Novoselov The University of Texas at Austin February 5, 2007Department of Accounting, B6400, McComb School of Business, 1 University Station, Austin, TX 787120211.
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Internal controls refer to the processes, policies, and procedures that are implemented to ensure the reliability of financial reporting, compliance with laws and regulations, and the effectiveness and efficiency of operations. Collusion is when two or more individuals work together to commit fraud or other illegal activities.
Most companies are required to have internal controls in place and report on them, especially public companies that are subject to regulations like the Sarbanes-Oxley Act.
Internal controls and collusion reports are typically filled out by a company's management, with input from auditors and other relevant personnel. The reports should include information about the company's control environment, risk assessment processes, control activities, information and communication systems, and monitoring activities.
The purpose of internal controls is to help ensure the accuracy, reliability, and integrity of financial reporting, prevent fraud and misappropriation of assets, and promote compliance with laws and regulations.
Companies must report on the effectiveness of their internal controls over financial reporting, any material weaknesses identified, and any remediation efforts taken.
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