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Case Study 2

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Submitted By dbaez09
Words 940
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June 5, 2014
Audit Report Number: LJB-505-2014

To: Patrick Krause President, LJB Company

Anthony Sahara General Counsel, LJB Company

Rebecca Patriosky Treasurer and Controller, LJB Company

From: Dilenia Baez Audit Engagement Manager, Ralph & Golberms, PLLC

Highlights

As part of the engagement approved by Patrick Krause, President of LJB Company. Ralph & Golberms, PLLC evaluated the current internal control functionality of LJB Company and develop (1) synopsis strength, weakness opportunities and threats presented by the status (2) a set of recommendations concerning any regulations by LJB Company to go public.

LJB COMPANY: Internal Control Review

I. NEW INTERNAL CONTROL REQUIREMENTS FOR GOING PUBLIC

Sarbanes-Oxley Act of 2002 (SOX), enacted on July 29,2002, is a United States Federal law that imposed new rules and regulations for all US public companies.

Under SOX Section 404, all publicly listed corporations are required to maintain an adequate system of internal control. Under SOX, corporate executives and the board of directors are personally responsible for making sure that the internal controls in place are effective and reliable. Independent auditors should also attest to the reliability of the said internal controls. Failure to do so would result to fines and/or imprisonment. 1. The following should be included in LJB Company’s annual report if the company decides to go public: * A statement of the management’s responsibility for establishing and maintaining effective internal control * A statement specifying the framework that the management used to evaluate the effectiveness of the company’s internal control * Management’s assessment of the effectiveness of their Internal Control. It must also include any “material weaknesses” currently present. The internal control is only

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