LJB Company | Case Study #2 LJB Company | Internal Control | |

This document contains information about the internal controls for LJB Company |

TABLE OF CONTENTS

1. Introduction …………………………………… Pg 2 2. Six Internal Control Activities ……………….. Pg 2 3. LJB Company Positive Side ………………… Pg 2 4. Segregation of Duties ……………………..…. Pg 3 5. Petty Cash …………………………………….. Pg 3 6. Human Resources ……………………………. Pg 4 7. Conclusion ……………………………………... Pg 4

LJB Company is planning to go public in the future and before doing the president of the company would like to be made aware of any regulations required of his company if they go public, so they asked our accounting firm to evaluate their system of internal controls. In the process of the evaluation, our firm noticed several problems within the organization. Fraud is a big thing to have to watch out for when it comes to business owners. There are six principles of controls activities that help with such risks like fraud. 1. Establishment of responsibility 2. Segregation of duties 3. Documentation procedures 4. Physical controls 5. Independent internal verification 6. Human resource controls
Mr. President, above is a list of internal controls that will help minimize the risk of fraud. After our evaluation we have noticed some problems that may turn into bigger problems if not addressed and addressed properly.
Before we get started on talking about what we noticed that wasn’t right, Let us talk about what we actually seen that was right and should continue going on in the future. When it comes to the fourth control, which is Documentation procedures, we like the fact that the accountant is the one that is picking up the checks. It is really good that the accountant will place the checks that haven’t been handed out in a safe that is located in his office.