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Acct 504 Case Study 2 Essay Example

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Acct 504 Case Study 2 Essay Example
ACCT504 - Accounting and Finance: Managerial Use and Analysis | Case Study 2 | Evaluation of LJB Company’s Internal Controls | | [Type the author name] | Due: Feburary 10, 2013 |

Table of Contents Paragraph
Introduction1
Accounting regulations2
Establishing a Control Environment3
Segregation of duties4
Segregation of record keeping form physical custody 5
Policies for petty cash6
Pre-numbered invoices 7
Distribution of paychecks8
Hiring policies9
Independent internal verification 10
Conclusion 11

The following is an evaluation of LJB Company’s internal controls, based on the information provided by the President of the company in an effort to prepare his company for the requirements needed to be a publically run company. First, I will establish the legal requirement needed and the importance of internal controls for an organization. Then I will review the current policies and establish better internal controls for each area of concern. Once these policies have been instituted by the LJB Company, they should be ready to proceed with their plan to go public.
There are many accounting regulations required by a public company. All accounting reports must follow the FASB and SEC guidelines. However, the newest accounting guidelines fall under the Saranes-Oxley act of 2002. The Act mandates reform to improve financial disclosure from companies and to reduce fraud. It requires that senior management must verify the accuracy of the reported financial statement. Plus it requires that management and auditors maintain a system of internal controls and report the methods of these controls. If the company doesn’t comply with the requirements, they could be subject to hefty fines.
Before establishing internal controls, it is essential that the company establishes their control environment. The company’s management must clearly outline its goals, standards and ethics since they “set the stage” for
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