Ljb Company Essay

IntroductionLJB family has asked the explanation firm to assess their clay of internal view ass because of the plan to go cosmos in the draw near approaching. The president wants to be aw are of any new regulations required of his high society if they go public. The current system of internal controls was explained to the accounting firm. Under SOX Sarbanes-Oxley homo locomoteion of 2002, every(prenominal) public traded U.S. corporations are required to maintain a enough system of internal controls. In order of magnitude for this to be implemented all Corporate Executives and board of directors draw to ensure that the controls are reliable and effective. With LJB follow incorporating the information from SOX act this allow for allow them reduce corporate actor by making sure that all of the procedures for financial reporting is side by side(p) in accordance to all guidelines. Internal Control RequirementsIn order for LJB Company to become a public trade, under the Sarbanes-Oxley Act of 2002 requires a registered U.S. publicly traded company to have an freelance audit committee as a part of its Board of Directors. My accounting firm recommends that since LJB is a microscopic sized company in basis of its employees should reevaluate their costs versus the benefits of be a public traded company. If LJB decides to go public in the near future in that respect will be some new internal control requirements. One of the factors of the internal control system is to ensure that the management is in control of its environment. Top management needs to make it clear and telegraphic onwhat can and wont be tolerated especially when it comes to the organizations values, direction statement and unethical behavior. The second factor of the internal control system is the company leading its control activities. The control activities are considered as the stead that holds the companys effort to address all risks that they may maybe bet going public. O ne thing that the company may face is fraud and in order to reduce fraud, management has to create and come on policies to address those specific risks.Strengths and RecommendationsSince LJB Company is relatively small, they have an advantage oer their competitors who are large companies. Being a small company repayable to its size of employees, one of the things they are doing right is being able to compulsive expectations and implement those within the organization. As a smaller company, the accountants decision to switch to pre-numbered invoices and the purchase of an indelible ink railway car was a good idea and investment. The pre-numbered invoices will prevent transactions from being record multiple times. With the internal control system this will require that the employees antecedent their source documents for the accounting entries. The indelible ink machine will serving organize all of the accounting duties.We recommended that LJB Company purchase an indelible ink ma chine to print all employees and cut checks. With the indelible ink machine this will make it difficult for unauthorized users to endorse checks and be approved. This will cut down on fraud and theft within the company. ViolationsLJB Company is very susceptible to fraud due the weaknesses and threats presented in the twenty-four hour period to day operations. The type of threats include no human choice control, lack of coin control, and no duties defined for each individual.LJB Company is lacking in the dissolution of duties because the Treasurer and Controller functions is being done by the same person. Although these cardinal duties are being performed by one person and stream lining the process this causes LJB to be susceptible to fraud and out of compliance with the SOX act requirements. Each of these duties should be performed two different individuals.LJB Company has lack of money controls. The lack of notes control has to be watched because within LJB each employee ha s chafe to petty cash and that shouldnt be the case. Access to petty cash should be restricted to authorized personnel only. Any time there is a disbursement from the petty cash there should be an fender receipt and signature that received the reimbursement.LJB Company human resource controls are very limited. Within this company both the Accountant and President have to review and approve all of the new hires which is the process. If LJB had a proper human resource control there would be a function habilitate in place for new hires by hiring someone with HR endure that has risk training. Having a more defined HR control resource this would allow the company to clearly define the different roles and responsibilities for each employee. excessively with the HR resource all employees would go through background check, each employee be given their own username and password and be tracked with the activity report. ConclusionWe believe that this assessment of the current controls of LJB Company and the recommendations provided will dally your expectations and allow your company to be a fully traded public company. To rejuvenate this problem in order for LJB Company to become a public trade, under the Sarbanes-Oxley Act of 2002 requires a registered U.S. publicly traded company to have an independent audit committee as a part of its Board of Directors. My accounting firm recommends that since LJB is a small sized company in terms of its employees should reevaluate their costs versus the benefits of being a public traded company.Works CitedKimmel, capital of Minnesota D.. Financial Accounting Tools for Business Decision Making, 7th Edition. John Wiley & Sons, 02/2013. .