American shareholders have billions, if not trillions, of dollars invested in various publicly traded companies across the country. With so much money at stake, it is wise that controls and safeguards are put in place to protect these investments from illegal or irresponsible activity. Publicly traded companies are required by law to develop such measures. These measures are often called internal controls. These internal controls exist for two main reasons. One reason is to keep employees honest. With so much money and other assets involved in business every day, the temptation to steal or misuse these assets cannot be ignored. Humans are imperfect beings and measures must prevent such activities from going unchecked. The second reason internal controls exist is to ensure the quality of companies' accounting reports. As mentioned earlier, humans are imperfect beings and make mistakes. When dealing with billions of dollars of assets, accounting errors can be very costly. Additionally, realizing that the primary goal of a business is to make money, companies may be tempted to distort their accounting numbers in order to facilitate their financial goals. Although internal controls are maintained by individual companies, they are monitored and audited under Sarbanes. -Oxley Act of 2002 or SOX Act as it is often called. This law requires companies to not only establish, but maintain and evaluate their internal control measures. The law also holds managers legally responsible for ensuring their business is in compliance. SOX also requires auditing of these control measures by outside agencies. These auditing bodies are independent of the company itself...... middle of paper...... uh, the measurements are not free. Databases must be maintained for record keeping. Personnel must be available to carry out the internal audit. Physical control measures cost money to install, maintain, monitor, etc. There is also the human factor to consider. In July 2009, Walmart reported revenue of $100.1 billion for the fiscal quarter. Imagine how many transactions had to be made to raise that much money. Given the different locations and the large number of transactions, there is a large margin for human error (D. Schepp, 2009). Even with control measures in place, deviations will surely arise. Overall, the use of internal controls is in the best interest of investors and public companies. They are not complete proof, but they are very effective in protecting investor assets and public confidence in our companies..