American shareholders have billions if not trillions of dollars invested in various publicly traded companies across the country. With so much money involved, it is wise that control measures and safeguards are put in place to protect these investments from any illegal or irresponsible activity. Publicly traded companies are required by law to develop such measures. These measures are often referred to as 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 those assets cannot be ignored. Humans are imperfect beings and measures must be taken to prevent such activities from going unchecked. The second reason internal controls exist is to ensure the quality of companies' accounting reports. As mentioned above, humans are imperfect beings and make mistakes. When dealing with billions of dollars in assets, accounting errors can be very costly. Furthermore, realizing that a company's primary objective is to make money, companies may be tempted to misrepresent their accounting data in order to facilitate their financial objectives. Although internal controls are maintained by individual companies, they are monitored and controlled under the Sarbanes -Oxley Act of 2002 or SOX act as it is often called. This law requires companies to not only establish, but also maintain and evaluate their own internal control measures. The law also holds executives legally responsible for making sure their company is compliant. The SOX Act also requires the verification of these control measures by external agencies. These control bodies are independent of the company itself... middle of paper... er, the measures are not free. Databases must be maintained for record keeping. Personnel must be available to conduct the internal audit. Physical control measures cost money to install, maintain, monitor, and so on. There is also the human factor to consider. In July 2009, Walmart reported sales of $100.1 billion for the fiscal quarter. Imagine how many transactions must have been made to accumulate that much money. Considering 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, discrepancies are sure to emerge. Overall, the use of internal controls is in the best interests of both investors and public companies. They are not complete proof, but they are very effective in protecting investor assets and public confidence in our businesses.