Internal controls are measures in place that allow for a more accurate and deliberate representation of a company's financial data. Internal controls also serve to protect a company's assets from theft, fraud, or misuse. With internal controls in place, it becomes more visible to recognize if someone is stealing or misusing funds in any way. Internal controls also allow you to zoom in on unintentional errors or mistakes. When these errors are caught early, it eliminates future problems for the company and its investors. The Sarbanes Oxley Act of 2002 is what imposes such internal controls on companies. This law requires all U.S. companies to follow internal control guidelines and standards. Many argue that egregious scandals such as those at Enron, Tyco, and WorldCom gave Congress the impetus to pass such a law that would have strict consequences if circumvented. Violators of the Sarbanes Oxley Act of 2002 (SOX) can be subject to heavy fines and even imprisonment (Weygandt, 2008). SOX holds executives accountable for financial results. In other words, these executives, under SOX, can no longer claim that they had no knowledge of any misrepresentations since SOX requires these executives to have strict internal controls. Under the direction of SOX, the Public Company Accounting Oversight Board (PCAOB) was created. The PCAOB is responsible for auditing these companies to ensure that they are complying with SOX standards (Weygandt, 2008). SOX laws consist of six key principles. The first principle is to ensure that there is a single group or employee responsible for a specific task. For example, Weygant (2008) illustrates a typical store with one person responsible for the cash in the register at the end of each shift. I...... middle of paper......controls today serve as laws in the free market of business. They are in place to provide a point of reference, but also to help businesses maintain a balance between integrity and accurate record keeping. Having strong internal controls can make a company more valuable to its investors, shareholders, consumers, and employees. However, there will always be exceptions or law breakers. As in any other area where laws have been passed to help individuals as well as the public, there will be violators. The important thing to remember is that offenders are not the majority. Just as the majority of people obey speed limits on the highway, the majority of businesses try to do the right thing. There are times, however, when people don't follow the rules and the simple fact that we have these laws means that there are consequences for violators..