| 2013 | | FGI Consulting |

[LJB Company] | This document is prepared for the President of LJB Company. Recommendations for IPO planning and Internal Control review to meet current status and carried over when the company is a publicly traded company. Controlled document 1A3872013 |

In this document recommendations are presented for consideration for the current and future internal controls of the company and for the planning of its IPO.
IPO
It is important to understand that good governance demonstrated is a requirement under the Sarbanes-Oxley Act of 2002 for publicly traded companies through maintaining an adequate system of internal controls. The executives and Board of Directors are required to ensure that these controls are effective, consistent in their administration of and reliable in their objectives. The Sarbanes-Oxley Act is arranged into eleven 'titles'. As far as compliance is concerned, the most important sections within these eleven titles are usually considered to be 302, 401, 404, 409, 802 and 906 (Sarbanes-Oxley Act 2002). Certification, which comes at a cost, can also be acquired for compliance which gives great credibility to the company for prospective capital resources such as investors and banking institutions with which the company plans to do business with such as borrowing operating capital – long term notes.
Determinations concerning how many shares are initially offered for sale, and what the value and cost per will be, will have to be decided on. Because stocks represent a share in a company, the assets owned by the company are components for setting the price of a stock. In order to gain the benefits of raising capital and achieving greater liquidity that an IPO offers, the Company must be more solidly established and better able to pass tougher regulatory requirements than in the past. Doing so comes with a bigger price-tag than ever before. These days, companies going public should expect to pay more and can reach upwards of $2 million in out of pocket expenses in some cases to cover a host of fees – among them legal, printing, listing, filing -- in addition to the underwriter discount and commission of the offering proceeds and to shore up internal processes to meet the tougher reporting and governance standards for public companies. (Inc.com, Elizabeth Wasserman, 2010).
Since the company has several features in place, improving them and becoming Sox Act compliant will help greatly in initial costs while developing a robust internal control system that is sustainable. If the company intends to print its own pay checks and company checks for accounts payable and vendor services, the indelible ink printer will be a great security application of internal control of producing checks in house. This operation will have to be limited in access to the accounting department along with the disbursement activities such as pay checks. Segregation of duties will have to be well established and documented so as to insure accountability by the parties assigned as the current accountant and/or accounting staff by name.

Internal Controls
Although some internal controls are in place now, the above noted sections of the Sox Act particularly apply here and will insure compliance with the laws and regulations, while protect the company’s assets and increasing efficiency of operations, which investors and lenders look for.
As the company is using Pre-numbered invoices, which gives great capability and tractability in control, should be extended to numbered company checks. A controlled environment that is under lock and key and accessed by only designated personal in the accounting department should be established. This extends to petty cash control both for security and disbursements with proper documentation. It is neither appropriate nor regulatory compliant to have petty cash, as it is managed today, for anyone to take, and leave receipts or IOU’s.
Pay checks should be picked up by the respective employee only and signed for at the time of receipt.
Human resources or should after the initial interview and application submittal by an applicant, which is a signed consent, conduct a background check on any prospective employee so as to review with the applicant where appropriate interest in that person remains for hire before offering employment.
All employees and new hires should have a log-in coding for access control to the company’s IT and digital communication access that can provide levels of access control and monitoring. This is typical with a Total Quality Management Program that addresses risk assessment and management. Part of risk management is minimizing liability and hold employees accountable. Important documentation that should be in place is an employee handbook that details company policy and signed printed acknowledgment for each employee to insure employees have received the handbook and are fully responsible for their compliance to company rules and policies.
These initial observation recommendations and compliance to the Sarbanes-Oxley Act of 2002 will insure the company is well positioned for current operations and its IPO.
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