| LJB Company
Internal Control Evaluation
All publicly traded companies in the United States are required to maintain an adequate system of internal controls per the Sarbanes Oxley ACT of 2002 or SOX. Corporate executives and boards of directors must ensure that these controls are reliable and effective. In addition independent auditors must attest to the adequacy of the internal control system. Companies that fail to comply are subject to fines and company officers can be imprisoned. In order to become SOX compliant changes will need to be and the following control activities implemented before you can go public: * Establishment of responsibility
* Segregation of Duties
* Documentation procedures
* Physical Controls
* Independent Internal Verification
* HR Controls
While going over your case notes I found a couple of positives about your internal processes. The using of pre numbered invoices speaks to good documentation procedures. This will help to create a paper trail for invoices that reduces the chances of human interference and would help to keep all invoices accounted for. Also I would highly recommend purchasing the indelible ink printer so that all check amounts can be printed with indelible ink. Not only does this help your company to be more efficient as the number of checks that you need to print grows above a number that makes sense to do manually it also lowers the possibility of human fraud and leaves a paper trail to be followed up on later. These were both very good moves on the part of your accountant however he should not be handling the role of both Treasurer and Controller which I will go over in the next section of this memo.
The positions of Treasurer and Controller need to be staffed by two separate people. In a SOX environment there needs to be segregation of duties and having the same person...
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