Acct 505

Topics: Internal control, Auditing, Sarbanes–Oxley Act Pages: 3 (743 words) Published: September 18, 2014


Week 5: Case Study 2 - Internal Control
Acct Fin: Managerial Use,Anlys

1. Inform the President of any new internal control requirements if the company decides to go public. (7 points) Answer – Based on facts given in the case, new internal control requirements that are needed for the company to go public are listed below a. Compliance with Sarbanes-Oxley Act Regulations

b. Compliance with SEC, GAAP and IFRS procedures to record all transactions c. Internal audit on company financial and business processes and transactions d. Implementation of better security measures for data protection, identity protection and ensuring that company resources are not misused

2. Advise the President of what the company is doing right (they are doing some things well) and also recommend to the President whether or not they should buy the indelible ink machine. When you advise the President, please be sure to reference the applicable internal control principle that applies. (13 points) Answer – Some of the things that the company is doing well and should continue are listed below and in accordance with the Sarbanes-Oxley Act and GAAP regulations: a. Pre-numbered invoices are used for accounting

b. Receiving checks and completing the monthly bank reconciliation c. Having an accountant who is able to manage the accounts and streamlining many of their processes d. Loyalty and trust with long term employees

In terms of requirement for purchasing the indelible ink machine, I would suggest that the company should procure it. Having the indelible ink machine would help the company to process its checks much faster and track these payments that would help in better record of transactions. Also, the accountant’s time would be saved that he could then use better in improving other processes or services in the organization. The indelible check unit would definitely help automate the accounting department by making it more efficient, and also help the business as...
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