...Running header: Internal Controls LJB Company: Internal Controls Summary President of LJB Company – AMS Consultant February 9, 2014 ACCT504 Accounting & Finance: Managerial Use Analysis Table of Contents Introduction 3 Internal Control Requirements 3 LJB Company: Current Internal Controls 4 LJB Company: Recommendations for Change to existing Internal Controls 5 Conclusion 6 References 7 Introduction AMS Consultants would like to handle re-organization of LJB Company’s internal controls prior to the organization going public. There are several existing issues within the organization that will need to be address prior to making any significant changes to the existing internal controls. LJB Company has been assigned to consultant Linda Robertson whom specialize in assisting executives to getting their organization’s internal controls up to the standards of Sarbanes-Oxley Act. SOX, requires all publicly traded U.S. corporations to maintain an adequate system of internal controls. LJB Company currently have one accountant that handles all accounting and financial responsibilities; however there are several other factors that are taking place within the organization that is not essential for maintaining adequate internal controls (Kimmel, P., Weygandt, J. & Kieso, D., 2013). As the president you have to consider all three factors of fraud triangle and analyze how these play a role within LJB Company; the three factors are opportunity, financial pressure...
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...LJB Company: Evaluation and Development of Internal Controls Accounting 504 Managerial Use and Analysis Professor Abner 8/10/2014 Evaluation of LJB Company’s current system of internal controls, with recommendations for improvements and an explanation of federal regulations required for the company to go public. Contents Introduction 2 Overview 2 Summary and Conclusion 3 Works Cited 4 Introduction The asked for appraisal of LJB Company's interior controls has been finished and our firm has likewise examined current regulations in regards to traded on an open market firms to help guarantee that your organization makes a smooth move into people in general business in the event that you choose to seek after this alternative. Traded on an open market enterprises are obliged to execute and take after the rules for inward controls and techniques for monetary reporting, put forward by the Sarbanes-Oxley Act (SOX) of 2002. This implies that upper administration and executives at LJB are in charge of guaranteeing that the controls are viable and solid, besides the organization should intermittently use outside examiners that will have the capacity to affirm the exactness of the interior controls. This data is recorded every financial year in the inside control report and will be incorporated as a feature of the yearly Exchange Act report. This demonstration serves to diminish the likelihood of corporate extortion by guaranteeing that all enterprises...
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...MEMORANDUM MEMORANDUM To : Mr. XYZ President, LJB Company From : M F Annigeri, T.E.L & Company, PA Date : 01-Oct-2011 Subject : Results of TEL Review of LJB Company Internal Controls Introduction: This memorandum transmits the review results for LJB Internal Controls requirement for the upcoming public issue of LJB. Further it also provides the details of current practices of Internal Controls and future recommendation as per the Federal Standards. Results & Recommendations: Based on our review we identified certain deficiencies that prevent LJB Company from fully satisfying the standards for Internal Control in the Federal Government. For your information and corrective action we, we have listed the below details. In the future, we anticipate conducting a follow up review to assess the actions you have taken. Considering your requirement and the fact that LJB Company has planned for IPO and reviewing your company’s information as provided by you, following are some of the details on establishing good strong Internal control for having a successful IPOs. Further keep in mind, while doing so the cost involved in the same should not exceed the desired benefits. Implement a light version of SOX with good documented and tested controls. Create and enhance current company policies and procedures to include risk management, insider trading, signing authorities and limits. SEC Complaint financial reporting...
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...Introduction LJB Company, a local distributor, is planning on going public in the future and has asked Lexary Accountants, Inc. to assist in this process by evaluating their system of internal control. The organization is committed to its customers and works to minimize waste by focusing all of its resources on producing the best possible value for customers, and being a lean organization, their investments are carefully considered and only made when it is clear that a long-term financial advantage exists in doing so. In going public, the President wants their organization's mission to remain in clear focus and wants to know the impact of any new regulations required for the company if they go public. With the promotion of the staff that is responsible for working on this evaluation at Lexary Accountants, Inc., I have been assigned to generate recommendations for my partner to share with the President of LJB Company. Lexary Accountant, Inc.’s Facts and Findings The organization has one accountant who serves as Treasurer and Controller who is also in charge of purchasing and paying for supplies. He receives checks, completes the monthly bank reconciliation, uses pre-numbered invoices and wants to buy an indelible ink machine to print checks. In addition to these responsibilities, he is responsible for picking up paychecks and safeguarding paychecks in a safe in his office. Both him and the President interviews and approves all new hires. Petty cash is easily available...
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...LBJ Company: Internal Control Evaluation Accounting 504: Managerial Use & Analysis Case Study 2 Written by: 8/10/13 This evaluation is being presented as an assessment of the preparedness of the LJB Company to go public at a future date. By researching current regulations regarding publicly traded firms we hope to prepare for a smooth transition into the trading market. The Sarbanes-Oxley Act of 2002 (SOX) has established the following guidelines for publicly traded corporations and require adherence for internal controls and procedures for financial reporting. Senior management and executives will be responsible for ensuring that controls are effective and reliable. Outside auditors must periodically verify the accuracy of and adherence to the internal controls. As part of the annual Exchange Act report, an internal control report will generated along with the information recorded during each fiscal year. It is recommended that the LJB Company adopt the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and remain in compliance with the SOX Act. This framework will follow six principles of internal control. 1) Establishment of Responsibility 2) Segregation of Duties 3) Documentation of Procedures 4) Physical Controls 5) Independent Internal Verification 6) Human Resource Controls Bruce Bulmer Consultations has completed its preliminary assessment of the current internal...
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...Internal Controls LJB Company Name Submitted to ACCT504 Accounting & Finance: Managerial Use & Analysis School: Submitted: Executive Summary This report provides an analysis and evaluation of the internal controls at the LJB Company and what is required before going public. We will touch base on IT Governance, Sarbanes-Oxley and COBIT, highlight items that LJB is doing right as well as those items LJB is doing wrong and a few improvements along the way. Company Overview LJB Company is a distributor of equipment for the surrounding areas. LJB is said to be a relatively lean organization which means that the company looks for ways to eliminate any unnecessary resources to operate at expected levels. LJB is looking to go public in the future. Internal Controls / IT Governance / Sarbanes-Oxley What are internal controls? The internal controls for any business consist of policies and procedures designed to provide management with reasonable assurance that the company achieves its objectives and goals. For any organization, public, private or governmental, there are benefits to using internal controls. * To ensure the confidence of the organizations’ constituencies (boards, employees, patients, donors, and students). * To assure there are checks and balances wherever there’s opportunity for mistakes or miscommunications. * To mitigate information technology risk protecting confidential records. * To help monitor assets of geographically...
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...Case Study 2 ACCT 504 Group A December 2, 2012 LJB Company Internal Controls Evaluation For the President of the company Prepared by Group A Accounting Firm December 2, 2012 Table of Contents: I. Introduction – Stating the Issue II. Body of the Report – LBJ Company Findings and Analysis III. Summary and Conclusions – Findings Communicated to the President and Recommendations IV. Work Cited – References to support Recommendations Introduction: The purpose of this document is to discuss the internal controls and why the principle activities are important for a business to operate effectively. Our goal is to make the necessary recommendations and evaluate the system for future planning. We hope to uncover any issues that will prevent the company’s productivity. We’ll submit our recommendations to correct and improve the current system in place. In conclusion we’ll present our analysis to the President along with the recommendations needed to implement a better system of internal control. Issues: There’s an issue with too much responsibility placed on one employee. The accountant serving as the controller and treasurer creates a problem with documentation as you don’t have anyone to verify cash and revenue is accounted for correctly. It’s too easy for one employee to manipulate the books in his favor without a clear segregation of duties. The accountant is leaving checks in his office during the week exposing sensitive information and increasing...
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...LJB Company | Internal Controls Report | FI504 Professor J. Roberts | Michael Franklin FI504 10/19/2011 | LJB Company is a local distributor serving various companies nationally. With its rapid growth and success, we have discussed the possibility of becoming a public company. If LJB Company decides to become a public company we should advise you of certain federal securities laws that LJB Company would face. It is imperative that you should discuss this information with your legal counsel. You will be required to submit periodic reports on a regular basis with the Securities and Exchange Commission (SEC). You will also be required to file an annual report with audited annual financial statements, management’s discussion and analysis of the company’s financial condition and results of operation. Every quarter you will be required to file a quarterly report. These quarterly financial statements must be reviewed by an independent public firm. You must also file current reports between quarterly and annual reports if a reportable event occurs. Reportable events include things such as disposition of assets, changes in control of the company and changes with principal officers. A Form 8-K must be filed within four business days of the event. I would like to make some suggestions pertaining to things that are correct within company structure and findings. I agree with the accountant picking up the checks and keeping them with him in the office then securing the...
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...Michelle B. Case Study #2 Internal Control Acct Fin: Managerial Use, Analysis October 6, 2013 Summary: The LJB Company is a local distributor located on New York’s lower east side. I was asked evaluate their system of internal controls because they are planning togo public in the near future. The president of the company wants to be aware of any new regulations required of his company if they go public, so he met with my colleague at a local restaurant. The president of the company explained the current system of internal controls to my colleague. She has since been promoted to a tax position so she has passed on the information below so I can generate recommendations for the partner at the accounting firm to share with the president of LJB Company. Based on the information I was able to collect from the LJB company, in order to go public there are some internal control that needs to be in place (Control environment, Risk Assessment, Control Activities, Information and Communication monitoring). These are done to prevent any fraudulent action and abuse and to be in compliance of the law. I find that operations at LJB are going very well. Keeping checks locked in a separate location is great safety measure. This prevents access to LJB funds protecting them from potential theft. Having pre-numbered checks in my opinion is a good safety measure as well. I would also recommend purchasing the indelible ink machine for the purpose of running checks. The use of the ink...
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...LBJ Company Internal Controls Assessment Report October 6, 2012 Table of Contents Introduction: 3 Considerations 3 Importance of Internal Controls 3 LJB Internal Control Assessment 3 Conclusion 4 Bibliography: 5 Introduction: LJB Company has engaged RR Accounting Firm to evaluate their current system of internal controls as LJB Company is planning to go public. Public companies have additional responsibility to shareholders and investors and must ensure integrity over their financial statements by maintaining a strong and effective internal control environment. The purpose of this report is to provide an objective analysis of the control environment of LBJ Company. This report will discuss importance of internal controls and identify both the current strengths and the current weaknesses in LJB Company's control environment within the following sections: 1. Compliance with Federal Regulations on Internal Controls for Public Companies. 2. Importance of Internal Controls. 3. Assessment of Internal Control Environment at LBJ Company. (a) Governance - Tone at the top (b) Segregation of Duties (c) Documentation Procedures (d) Physical Security (e) Human Resources 1. Compliance with Federal Regulations on Internal Controls for Public Companies As LJB Company is considered to be a small organization, going from private owned to public traded will require extensive planning. During...
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...ACCT 504 Week 5 Case Study 2 Internal Control LJB Company Click Link Below To Buy: http://hwcampus.com/shop/acct-504/acct-504-week-5-case-study-2-internal-control-ljb-company/ Or Visit www.hwcampus.com Case Study 2 – Internal Control- Due by Sunday of week 5 LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The President wants to be aware of any new regulations required of his company if they go public so he met with a colleague of yours at a local restaurant. The President of the company explained the current system of internal controls to your colleague. Your colleague has since been promoted to a tax position so she has passed on the information below so you can generate recommendations for the partner at your accounting firm to share with the President of LJB Company. Since LJB Company is a relatively lean organization, they have a lot of faith in their long-term employees. They have one accountant who serves as Treasurer and Controller which streamlines many of their processes. In this dual role, he purchases all of the supplies and pays for these purchases. He also receives the checks and completes the monthly bank reconciliation. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant...
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...ACCT 504 Week 5 Case Study 2 Internal Control LJB Company Click Link Below To Buy: http://hwcampus.com/shop/acct-504/acct-504-week-5-case-study-2-internal-control-ljb-company/ Or Visit www.hwcampus.com Case Study 2 – Internal Control- Due by Sunday of week 5 LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The President wants to be aware of any new regulations required of his company if they go public so he met with a colleague of yours at a local restaurant. The President of the company explained the current system of internal controls to your colleague. Your colleague has since been promoted to a tax position so she has passed on the information below so you can generate recommendations for the partner at your accounting firm to share with the President of LJB Company. Since LJB Company is a relatively lean organization, they have a lot of faith in their long-term employees. They have one accountant who serves as Treasurer and Controller which streamlines many of their processes. In this dual role, he purchases all of the supplies and pays for these purchases. He also receives the checks and completes the monthly bank reconciliation. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant...
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...Case Study 2 FI504 Accounting and Finance for Managerial Use and Analysis Recommendations for LJB Company: Requirements for Going Public: A requirement of all publicly traded companies is to comply with the Sarbanes-Oxley Act of 2002. This means that LJB would be required to maintain a system of internal control. The controls must be reliable and effective, which the executives and Board of Directors must monitor. Also, an outside auditor must confirm that the control systems are sufficient. Although there will be additional work on both designing, testing and auditing of controls if LBJ decides to go public, but the control system may result in money and time saved in the long-term regardless. Good practices: LJB Company currently has some good practices I suggest they continue. The use of pre-numbered invoices allows for missing or undocumented invoices to be caught quickly. This practice is considered a documentation procedure under internal controls. Having two managers approve new hires helps ensure a good fit. It’s good that the accountant completes bank reconciliation. While using a bank is a form of control for cash, the reconciliation enables LJB to make sure there are no errors between what the bank and what they have on the books. Areas of Improvement: There are a number of practices by LJB that don’t deter fraud and would need to be changed before considering going public. Segregation of duties: The duties for handling assets...
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...Memo To: John Clarks; President of LJB Company From: Certified Public Accountant Date: 1/22/2012 Re: LJB Internal Control Analysis Dear John, In regards of your company going public, you must be informed that under the Sarbanes Oxley Act all publicly traded U.S. corporations are required to maintain an adequate system of internal control. These internal controls are reliable and effective and if your company fails to comply, it will be a subject to fines, and company officers can be imprisoned. There are five primary components of internal control which must be applied when going public: • A control environment. This will be the responsibility of top management including your effort to make it clear that the organization values integrity and that unethical activity will not be tolerated. • Risk assessment. Your company must identify and analyze the various factors that create risk for the business and must determine how to manage these risks. • Control activities. This activity helps in reducing the occurrence of fraud and your management team must design policies and procedures to address the specific risks faced by the company. • Information and communication. The internal control system must capture and communicate all pertinent information both down and up the organization, as well as communicate information to appropriate external parties. • Monitoring. Internal control systems must be monitored periodically for their adequacy. Significant deficiencies need...
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...ACCT 504 Week 5 Case Study 2 Internal Control LJB Company Click Link Below To Buy: http://hwcampus.com/shop/acct-504/acct-504-week-5-case-study-2-internal-control-ljb-company/ Or Visit www.hwcampus.com Case Study 2 – Internal Control- Due by Sunday of week 5 LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The President wants to be aware of any new regulations required of his company if they go public so he met with a colleague of yours at a local restaurant. The President of the company explained the current system of internal controls to your colleague. Your colleague has since been promoted to a tax position so she has passed on the information below so you can generate recommendations for the partner at your accounting firm to share with the President of LJB Company. Since LJB Company is a relatively lean organization, they have a lot of faith in their long-term employees. They have one accountant who serves as Treasurer and Controller which streamlines many of their processes. In this dual role, he purchases all of the supplies and pays for these purchases. He also receives the checks and completes the monthly bank reconciliation. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant...
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