An Examination of LBJ Distribution Company Internal Controls Infrastructure Pre IPO

ACCT 504: Financial Accounting
Keller Graduate School of Management
Professor Ganesh Pandit
Date: February 9, 2014

Pre IPO Examination of LBJ Distribution Company Internal Controls Infrastructure
Prepared for: President, LBJ Distribution Company
Prepared By: Véron S.A. Lake
Company: LLMCO
Date: 9 February 2014

Table of Contents

Introduction 3 Purpose 4 Legal Requirement of Internal Controls 5 IPO Readiness: Financial Internal Controls 5 IPO Readiness: Recommendations 6 Reliable Monthly Reports 6 Adequate Staffing of Financial Departments 6 Implementation of Audit Infrastructure 6 IPO Readiness: LBJ Internal Control Strengths 7 Pre-numbered Invoices 7 Recommendations: Indelible Ink Machine 7 IPO Readiness: LBJ Internal Control Weaknesses 7 Staffing: Accounting Department 7 Staffing: Human Resource Department 8 Recommendations: Handling Petty Cash 8 Recommendations: IT Department Physical Controls 9 Conclusion 9 Works Cited 10

Introduction

A company going public today is different than what it was in the dot com era; this is because the IPO landscape has changed significantly in the last decade (KPMG, 2013). Recently experts has seen compression in the markets, decreasing or shifting mergers and acquisition activity, faltering businesses and more scrutiny on balance sheets and company cash as well as access to capital (KPMG, 2013; Morgan Franklin, 2012). Add to these multitudes of new requirements the regulations and requirements of the Sarbanes-Oxley Act and company presidents quickly come to realize that a successful IPO takes significant planning around today’s economic climate. This is especially so around internal controls infrastructure, internal audit and other risk and governance functions (Deloitte & Touche,