LJB Company: Evaluation and Development of Internal Controls

Accounting 504
Managerial Use and Analysis
Professor Abner 8/10/2014 Evaluation of LJB Company’s current system of internal controls, with recommendations for improvements and an explanation of federal regulations required for the company to go public.

Contents Introduction 2 Overview 2 Summary and Conclusion 3 Works Cited 4

Introduction
The asked for appraisal of LJB Company's interior controls has been finished and our firm has likewise examined current regulations in regards to traded on an open market firms to help guarantee that your organization makes a smooth move into people in general business in the event that you choose to seek after this alternative. Traded on an open market enterprises are obliged to execute and take after the rules for inward controls and techniques for monetary reporting, put forward by the Sarbanes-Oxley Act (SOX) of 2002. This implies that upper administration and executives at LJB are in charge of guaranteeing that the controls are viable and solid, besides the organization should intermittently use outside examiners that will have the capacity to affirm the exactness of the interior controls. This data is recorded every financial year in the inside control report and will be incorporated as a feature of the yearly Exchange Act report. This demonstration serves to diminish the likelihood of corporate extortion by guaranteeing that all enterprises take after particular systems for monetary reporting.
Overview
Our firm recommends that your company adopt the necessary framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) so that the company will be in compliance with SOX Act. There are five principles of internal control that LJB should implement and adhere to: * Establishment of Responsibility * Segregation of Duties * Documentation of Procedures * Physical Controls * Independent Internal Verification * Human Resource Controls

In the wake of evaluating the current level of inward controls at LJB, we have recognized that there are a few decent practices in actuality and there are a few zones that could utilize change. The bookkeeper at your organization is rehearsing physical control by keeping pay weighs secured the sheltered at the end of the day. A more elevated amount of inside control might be created keeping the checks secure at all times unless being dispersed, or the organization ought to consider obliging all workers to get their compensation through immediate store. It is a decent thought to switch to prenumbered receipts and our firm concurred with the buy of the permanent ink machine. This will give your organization higher physical control with regards to dispensing of checks and will give the organization higher security against check misrepresentation.

Controls need to be made for the administration of unimportant money. At present LJB has no real way to oversee or figure out whether trusts are constantly utilized appropriately or on the off chance that they are continuously stolen on the grounds that the organization is working singularly on the guideline of the honor framework. This demonstrates that LJB has extraordinary certainty in the respectability of its representatives, however in the event that the organization ought to choose to open up to the world then larger amounts of controls must be built.

LJB has an extremely incline staff which serves to stay with the's overhead low. It is suggested that agreeable sets of expectations and obligations are made to consider a stronger arrangement of responsibility. The obligations of the bookkeeper ought to be partitioned so that one individual is not in charge of the whole bookkeeping methodology. This will consider a superior arrangement of check and adjusts, that will further guarantee exactness in the bookkeeping procedure.

Prior to any workers are employed a foundation examination ought to be led. This will oblige that LJB employ a HR worker. This would have spared the organization time, cash and disappointment concerning the representative who was survey unseemly destinations on organization gear and would have dispensed with the danger of contracting a single person with a lawful offense foundation. Further controls will need to be built around there in light of the fact that personal verifications just offer data about past issues. The machines at LJB don't oblige any sort of worker validation and don't screen they timeframe used on supplies or what kind of material is, no doubt saw. Our firm proposes that the accompanying workstation controls are actualized: * Firewalls that restrict material that is not necessary to conducting company business * Assign user names and passwords for employees to gain access to company computers * Assign user names and passwords for employees to gain access to the internet
Summary and Conclusion
All in all, your organization will need to meet certain necessities if it be chosen to open up to the world and these incorporate inside control approaches that are directed by law. LJB has a few decent practices set up and needs to further create controls with respect to human assets, partition of obligations and organization stores. It is vital that LJB understand that in spite of the fact that these controls will have a forthright cost connected with them, these progressions will bring about a stronger more compelling framework. This framework will help the organization to recognize misfortunes sooner, adjust failures and expense the organization less over the long haul.

Works Cited
Kimmel. Financial Accounting, 6th Edition. John Wiley & Sons. Retrieved from <vbk:9781118233634#outline(1)>.
Committee of Sponsoring Organizations of the Treadway Commission. Enterprise Risk Management —Integrated Framework, 2004.