Ljb Company
LJB Company: Internal Controls
LJB Company: Internal Controls
Contents Introduction 3 Internal Control Requirements 2 Strengths and Recommendations 2 Violations 3 Conclusion 4 Works Cited 4
Introduction
LJB Company has asked the accounting firm to evaluate their system of internal controls because of the plan to go public in the near future. The president wants to be aware of any new regulations required of his company if they go public. The current system of internal controls was explained to the accounting firm. Under SOX Sarbanes-Oxley Act of 2002, all public traded U.S. corporations are required to maintain a sufficient system of internal controls. In order for this to be implemented all Corporate Executives and board of directors have to ensure that the controls are reliable and effective. With LJB Company incorporating the information from SOX act this will allow them reduce corporate fraud by making sure that all of the procedures for financial reporting is following in accordance to all guidelines.
Internal Control Requirements
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. If LJB decides to go public in the near future there 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 concise on what can and won’t be tolerated especially when it comes to the organizations values, mission statement and unethical behavior. The second factor of the internal control system is the company leading its control activities. The control activities are
LJB Company: Internal Controls
Contents Introduction 3 Internal Control Requirements 2 Strengths and Recommendations 2 Violations 3 Conclusion 4 Works Cited 4
Introduction
LJB Company has asked the accounting firm to evaluate their system of internal controls because of the plan to go public in the near future. The president wants to be aware of any new regulations required of his company if they go public. The current system of internal controls was explained to the accounting firm. Under SOX Sarbanes-Oxley Act of 2002, all public traded U.S. corporations are required to maintain a sufficient system of internal controls. In order for this to be implemented all Corporate Executives and board of directors have to ensure that the controls are reliable and effective. With LJB Company incorporating the information from SOX act this will allow them reduce corporate fraud by making sure that all of the procedures for financial reporting is following in accordance to all guidelines.
Internal Control Requirements
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. If LJB decides to go public in the near future there 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 concise on what can and won’t be tolerated especially when it comes to the organizations values, mission statement and unethical behavior. The second factor of the internal control system is the company leading its control activities. The control activities are
Cited: Kimmel, Paul D.. Financial Accounting: Tools for Business Decision Making, 7th Edition. John Wiley & Sons, 02/2013. .