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Journalism of Courage
Federal regulators backed a rule requiring corporate management to say in their annual reports if they have proper controls in place. The regulation intends to deter fraud such as the massive accounting irregularities that surfaced before and after the December 2001 bankruptcy filing of Enron Corp and the June-2002 guilty verdict against its auditor Andersen. The US Securities and Exchange Commission (SEC) voted 5:0 for CEOs to disclose their conclusions about effectiveness of their companies’ internal controls and procedures .
Regulators feel that adequate controls ensure proper authorisation of transaction and reporting under generally accepted accounting principles, (GAAP).
