Since the Act has been in place if a company indicates weakness within the company, the company stock will decline. Stanford Law School, sponsored by Financial Executives International (www.fei.org), conducted a study that focused on 141 companies between November 2003 and October 2004 that gave detailed disclosures about their material weaknesses had a decline in stock by 5 to 10 percent (Agami, 2006). There can be certain limitations that could keep internal controls from not working effectively. For instance the fall of Enron was because of the staff working to together to defraud the accounting practices for their personal gain. These types of practices can cause internal controls to fail as well as lack of knowledge. If the company’s accountant is unclear on the policies and procedures of internal controls, this will lead the company to fail. All employees must have knowledge of internal controls, because if the employees don’t have the knowledge they cannot practice internal controls, this why it is important that employees should be properly trained on internal control practice. All employees should have the knowledge on what will keep the company safe from failure. It is the responsibility of the company to make sure they have the right people for the right job. If a company does not place the right employees in key positions then this can lead the company to have errors that could make the company fail. If a company does not supply their employees with the correct tools to complete a job the job will not be completed correctly and the whole company will
Since the Act has been in place if a company indicates weakness within the company, the company stock will decline. Stanford Law School, sponsored by Financial Executives International (www.fei.org), conducted a study that focused on 141 companies between November 2003 and October 2004 that gave detailed disclosures about their material weaknesses had a decline in stock by 5 to 10 percent (Agami, 2006). There can be certain limitations that could keep internal controls from not working effectively. For instance the fall of Enron was because of the staff working to together to defraud the accounting practices for their personal gain. These types of practices can cause internal controls to fail as well as lack of knowledge. If the company’s accountant is unclear on the policies and procedures of internal controls, this will lead the company to fail. All employees must have knowledge of internal controls, because if the employees don’t have the knowledge they cannot practice internal controls, this why it is important that employees should be properly trained on internal control practice. All employees should have the knowledge on what will keep the company safe from failure. It is the responsibility of the company to make sure they have the right people for the right job. If a company does not place the right employees in key positions then this can lead the company to have errors that could make the company fail. If a company does not supply their employees with the correct tools to complete a job the job will not be completed correctly and the whole company will