Management Role In Ensuring An Effective Internal Control System

Effective internal control as a critical aspect in an organisation became more pertinent for business functions in the early 2000s when accounting scandals were prominent in companies in the United States of America (USA). In light of this, several guidelines, laws or Acts were released such as the Sarbanes-Oxley Act of 2002 in the USA and Security and Exchange Commission (SEC) guidance on the implementation of Sections 60 – 63 of the Investment and Securities Act of 2007 published in 2021 in Nigeria. These laws protect investors from fraudulent financial reporting by organisations and improve the accuracy and reliability of corporate or organisational disclosures. The laws impacted the corporate governance code by re-emphasising that business managers are responsible for financial reporting and creating a step-by-step process through which the organisation ensures that set objectives are achieved. The process created is termed as internal control.