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Corporate compliance report: Sarbanes-Oxley and the COSO initiative

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  1. Introduction.
  2. Overview of COSO.
  3. Enterprise risk management plan for Western Asset Inc.
    1. Control environment.
    2. Risk assessment.
    3. Control activities.
    4. Information and communication.
    5. Monitoring.
  4. Conclusion.
  5. References.

With recent incidents of fraud and inside trading, the business world has gained renewed interest and emphasis on corporate governance and regulatory compliance. Organizations have taken more serious measures to establish enterprise risk management plans to avert, identify, and manage risks and exposures. Recent corporate scandals such as those of Enron, WorldCom, and even with Martha Stewart, tougher governance standards are set in place to minimize errors and loss through proactive measures.
This paper will attempt to educate the readers on the importance of internal controls and submit a proposal to minimize enterprise risks by applying the principles or recommendations of the Committee of Sponsoring Organization of the Treadway Commission (COSO).

[...] Conclusion Organizations of today must take proactive approach in enterprise risk management not only to comply with federal and state mandates, specifically the Sarbanes-Oxley Act of 2002, but to also avert any incidents of fraud, inside trading, and other illegal acts within the organization. Organizations must establish measures and/or internal controls to prevent, identify, and management risks, exposures and incidents. The continued commitment and dedication of all stakeholders are necessary for the success of the enterprise risk management plan. References Bokert, M.E., and Hahn, A. [...]

[...] Section 404 creates accountability on the part of corporate officers and board of directors on the accuracy of its financial statements as well as the evaluation of internal controls. Additionally, Section 404 makes officers and board members responsible for processes for financial disclosures, liabilities, and weaknesses of the internal controls. In order to comply to SOX, organizations must successfully show documentations and evaluations proving that their financial reporting processes are accurate, operating effectively, and are closely monitored. General Master's (2006) website states that Security and Exchange Commission (SEC) rule-making for Sarbanes-Oxley Section 404 mandated that a company's internal control over financial reporting should be based upon a recognized internal control framework. [...]

[...] Furthermore, the audits should help the organization gauge the effectiveness of its existing systems or processes and identify weaknesses. Western can use this as a basis for periodic improvements in its systems or processes, may it be for financial processing, technical, or any other organizational/operational processes. The objectives of the audit are to confirm the accuracy of the financial statements and transactions, gauge the effectiveness of current systems, identify flaws/weaknesses, and determine if illegal acts such as fraud and/or inside trading has occurred. [...]

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