Internal controls are increasingly a crucial part of any business, large or small. Controls serve two purposes according to Financial Accounting Chapter Eight: They protect assets and improve the accuracy and reliability of accounting records. Expanding on this concept, internal controls are put in place as a result of activities that have occurred in the past and are an effort to protect internal and external users. Internal controls protect company assets by establishing fair and effective regulations with the goal of preventing theft. Regulations designed to establish responsibility, segregation of duties and accountability protect investors, management and the public. The result of the financial outrage and disasters of WorldCom, Enron, Tyco, Hollinger, and Tyco necessitated the need for better regulation and oversight, leading to the creation of the Sarbanes Oxley Act (SOX ). Public Law 107-204 of the 107th Congress was signed into law. by the Senate and House of Representatives to “protect investors by improving the accuracy and reliability of information provided by companies pursuant to the securities laws and for other purposes.” This law, better known as the Sarbanes Oxley Act, includes a number of sections designed to supervise and prevent securities fraud, as well as to ameliorate white-collar crime. The six key principles of SOX internal controls according to Internal Control and Treasury are: establishment of responsibilities, segregation of duties, documentation procedures, independent verification, physical controls and other controls. Sarbanes Oxley changed internal controls by reducing risk and creating accountability. A key factor, establishing accountability includes authorization and approval of transactions by a... middle of paper ......have a purchasing, shipping and receiving department; it may be such a small business that these roles are performed by a single person. Even if the company has separate departments, the buyer and escrow can still collude to defeat control, by ordering more but reporting less. Controls and regulations are in place to ensure fair, efficient and transparent markets. They constitute a preventive measure resulting from experiences. These controls hope to encourage honesty through accountability and by attaching a personal cost to dishonesty. They are in place to establish and maintain regulations to protect the interests of investors, the public and the pursuit of economic growth. Only time will tell if they succeed or are just an expensive band-aid for the human need to possess more than one need or merit - greed..