February twelve, 20123
LJB: The Journey to Heading Public
LJB's Current Internal Controls an evaluation and advice LJB Firm
Table of Contents
Current Condition Assessment of LJB2
Recommendations4 -- 5
Summary and Conclusion6
In 2002 the Sarbanes-Oxley Act was passed which requires all publically placed organizations, no matter size, to comply with 11 titles of economic practices and company governances to keep up an adequate system of internal control. Of those eleven, there are five sections that address compliance and want particular account when getting publically exchanged company, these are: Section 302, 401, 404, 409 and 802. (http://www.soxlaw.com). Sarbanes-Oxley presented major changes to regulations that govern public companies. SOX also established the Public Firm Accounting Oversight Board (PCAOB). (Sarbanes-Oxley Work 2002 (n. d. ) Retrieved by: http://www.soxlaw.com). The legislation has not been passed to get cumbersome but since an attempt to regain householder's support after several financial scandals among large corporations. There's the key reason why a company really should have proven and secure inner controls: * Safeguard Assets
* Enhance accuracy and reliability of accounting data
* Maximize efficiency of operations
5. Ensure complying with regulations
Internal control consists of each of the related strategies and actions adopted within an organization to guard its resources. (Kimmel, Weygandt, Kieso, 2011) Internal control has Five Primary Components: 1 . Control Environment
installment payments on your Risk Examination
3. Control Activities
some. Information and Communication
your five. Monitoring
First since LJB is currently a privately held firm they are not required to follow SOX, however the upcoming plan is always to become a publically held firm and therefore the analysis and tips within this report should be considered mandatory as LJB makes the journey from private to public. This reviews details the particular current state of LJB's internal control processes, sources the five primary pieces of Fraud and Internal Control, then lists a gap assessment, recommendations of what the subsequent steps will be for LJB to continue over the path of going open public and then lastly a summary. Findings reveal there are many processes that are being completed very well at LJB in added it highlighted processes that must be improved therefore LJB can be in compliance with SOX.
The first step in establishing a controlled environment and maintaining internal control activities is always to follow 3 main guidelines.
* Create Responsibility вЂ“ Who is accountable for what duties? * Segregation of Obligations вЂ“ Require related activities to be performed by diverse individuals 2. Documentation Techniques вЂ“ Almost all documents must be organized and clearly accounted for. Current Condition of LJB
* Treasurer and Control combined role with little controls- This single documentalist holds the two positions; tasks include although not limited to: 5. Purchases all supplies
2. Pays most supply expenses
* Gets all the investigations
* Finishes months bank reconciliation
2. Handles small cash finance, all employees have access to that * Uses pre-numbered accounts
* Distributes paydays and locks them in a secure located in his office 2. Human Resources unknown controls intended for managing or perhaps hiring of employees: * One noted case of employee misconduct
2. No documented procedures pertaining to granting employee access including but not restricted to computer systems, perceptive assets or physical access to safes and petty cash compartment. * Salaries Duties вЂ“ Printed investigations remain with accountant for employees to pick up. * Unknown in the event accountant remains to be in their workplace the entire day time on pay day advance * Inspections are locked in the secure located in the accountants business office
LJB includes a history of...
References: Kimmel, Paul D., & Weygandt, Jerry J., & Kieso, Jesse E. (2011) Financial Accounting Tools For Business Decision Making 6E. Hoboken, NJ: John Wiley & Kids, Inc.
Sarbanes-Oxley Act 2002 (n. deb. ) Retrieved from: http://www.soxlaw.com
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