Case Study 2
ACCT504-Managerial Accounting and Finance
Professor Dediemar
February 10, 2014

Table of Contents
Introduction………………………………………………………………3
Evaluation of Internal Controls at LBJ Company………………………..4
Efficiency of LBJ Company………..……………………………………5
Inefficient Practices at LBJ………………………………………………5
Recommendation to Purchase Indelible Ink Machine…………………….6
Conclusion……………………………………………………………….7
Work Cited...…………………………………………………………….8

To: LBJ Company President
From: Duc Nguyen, Accounting and Consulting
Subject: Evaluation of LJB Company’s Internal Control Structures
Date: February 10, 2013

Introduction
In this assessment we will attempt to evaluate and address the efficiency or inadequacy of the internal control procedures used within LBJ Company. Internal controls are a system of checks and balances designed to detect and prevent fraud and errors. The Sarbanes-Oxley Act requires U.S. companies to enhance their systems of internal control (Kimmel 186). Complying with the internal controls practices set forth by SOX Act prevents fraud, encourage efficiency and effectiveness of operations, and ensures a company’s compliance with applicable laws. Furthermore we see that because of Sox many companies are improving the quality of its financial reporting. Under SOX, all publicly traded U.S. companies are required to maintain a sufficient system of internal control. Corporate executives and boards of directors must ensure that these controls are reliable and effective (Kimmel 337). We will address the five critical areas of internal controls which consist of: 1. The Control Environment 2. Risk Assessment 3. Control Activities 4. Information and Communication 5. Monitoring
All principles of internal control are important to ensure effective financial reporting and sustainability reporting. We will attempt to evaluate these areas