...Recommendation Brief for an Internal Accountant Recommendation Brief for an Internal Accountant Internal accountants or auditors can be beneficial to a company when there are problems within their accounting functions that are causing harm to the financial records. Internal auditors are able to perform many different tasks for the company and if they are an employee of the company already, it can save time when there is an issue because he or she has the knowledge of the internal control systems and may be able to fix the bug or problem in less time. Internal auditors are usually employed because they can compare what the company has now and what it should be in order to stay in compliance with the SOX Act (Advameg, Inc., 2011). Internal accountants can review how reliable the financial information is, review the company’s systems to make sure they are in compliance, make recommendations to improve the system, check the assets of the company and how they are safeguarded, and advise the company if their resources are being used adequately (Advameg, Inc., 2011). Internal accountants can perform different types of audits for the company such as an operational, program, fraud, ethical business practices, compliance, financial, control self assessment audits as well as a systems development and life cycle review (Advameg, Inc., 2011). Employing an internal accountant can save the company money because the company will not have to hire auditors to perform the different...
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...LJB Company Audit Report regarding Internal Control Activity Requirement Evaluation for Initial Public Offering and Indelible Ink Printer Procurement Recommendation Author: Phillip Stevens, Buck Stops Here Accounting Associates Securities Exchange Commission Internal Control Requirement Explanation As part of the Initial Public Offering application process with the Securities and Exchange Commission, companies are required to document and validate their internal control activities including policies and procedures. The internal controls must ensure reliable financial reporting, effective and efficient operations, and compliance with applicable laws and regulations. Safeguarding assets against theft and unauthorized use, acquisition, or disposal is also part of internal control “best practices”. The Securities Exchange Commission guidelines for internal control activity validation include one or more of the principles: • Segregation of duties requires that different individuals be assigned responsibility for different elements of related activities, particularly those involving authorization, custody, or recordkeeping. For instance, the same person who is responsible for an asset's recordkeeping should not be responsible for physical control of that asset. • Proper authorization of transactions and activities helps ensure that all company activities adhere to established guide lines unless responsible managers authorize another course of action. Proper authorization...
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...- Internal Control for LJB Company Course: ACCT 504- Financial Accounting November 2012 Table of Contents: Cover Page……………………………………………………………………….1 Table of Contents…………………………………………………………………2 Why Use SOX……………………………………………………………………3 Recommendations & SOX Principles……………………………………………3 Enhancing the Positives………………………………………………………….5 References……………………………………………………………………….7 Tom Wheatley, President LJB Company 20 N Wacker Drive, Suite 200 Chicago, IL 60605 re: Improvement to Internal Controls December 12, 2012 Dear Tom Wheatley, Why Use SOX? There are several internal control considerations that Midwest Consulting advises you to explore going forth. When you become public, LJB Company is required to meet Sarbanes- Oxley Controls (SOX). These standards are an internal control system whose purpose is to stop fraud and meet the terms of SOX laws and regulations. It can also be used to systematically improve businesses and is an opportunity to recognize the significance of you, the President of LJB Company, getting involved in certification of accuracy in financial data. Many other top level executives are doing the same! I have identified several recommendations that align with internal control principles and would like for you to consider them as you move forth. Your accountant will need to become cognizant of his responsibility to make all matters regarding your organization’s financial matters transparent. Also, the paired responsibilities of purchasing...
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...INTRODUCTION 3 CONTROLS OVER FINANCIAL REPORTING NEEDS IMPROVEMENT 3 Recommendations 4 Management Response 4 REPORTING OF NON-VALUED EVIDENCE 4 Recommendations 5 Management Response 5 INADEQUATE FUNDS MANAGEMENT CONTROL 5 Recommendations 5 Management Response 6 BIBLIOGRAPHY 8 \ DEPARTMENT OF JUSTICE IG/GAO REPORT INTRODUCTION The Department of Justice (DOJ) is led by the Attorney General and consists of forty-two agencies, which cover a variety of responsibilities. DOJ prosecutes federal law offenders and represents the U.S. Government in court. DOJ is responsible for enforcing the law and defending the interests of the United States. The objective of the Department of Justice’s internal control program is to provide reasonable assurance that operations are effective, efficient, and comply with applicable laws and regulations; financial reporting is reliable; and assets are safeguarded against waste, loss, and unauthorized use. The Department identifies issues of concern through a strong network of oversight councils and internal review teams. These include the Department’s Senior Assessment Team, the Justice Management Division’s Internal Review and Evaluation Office and Quality Control and Compliance Group, and Departmental component internal review teams. The Department also considers reports by the Office of the Inspector General (OIG) in its evaluation of internal control. (FY 2011 Performance...
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...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...
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...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...
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...Introduction………………………………………………………………………………3 New Internal Control Requirements……………………………………………………4 Positives & Negatives…………………………………………………………………….4 Recommendation on Ink Machine………………………………………………………5 Summery & Conclusion.………………………………………………………………….5 Work Cited………………………………………………………………………………..6 Introduction The purpose of this report is to show the importance of internal controls for LJB Company if it’s decided that the company will go public. Through out the document three major topics will be address. The first being, a reviewing of new internal control requirement before the company goes public. Secondly, an overlook of the positive & negative policies that affects internal control and its procedures, along with recommendations for the negatives. Finally, an advisement on whether or not the company should buy the indelible ink machine. New Internal Control Requirements New requirements have been placed since 2002 for all publically traded US companies and their internal controls, as stated by Walter T. Harrison, Charles T. Horngren, and C. William Thomas in their book Financial Accounting, VitalSource for DeVry University (p. 236). Congress passed the Sarbanes-Oxley Act (SOX) to address and ease the concerns of the public ever since the scandal of Enron and WorldCom. In order to comply with the SOX act the following requirements must be followed: * Public companies must have an internal control report with an evaluation of an outside auditor...
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...The Internal control management strategies Prepared for: LJB Company Prepared by: Chibuzor E. Edeh Devry University ACCT 540: Financial Accounting TABLE OF CONTENT Introduction ----------------------------------------------------------------------------------------------------------3 Internal control regulations for public companies -----------------------------------------------------------3-4 LJB’S good internal control measures -------------------------------------------------------------------------4 Recommendations for Indelible ink --------------------------------------------------------------------------4 LJB’S poor internal control measures ------------------------------------------------------------------------5-6 Recommendations for improvement --------------------------------------------------------------------------5-6 Summary --------------------------------------------------------------------------------------------------------7 References ------------------------------------------------------------------------------------------------------- 7 INTRODUCTION Internal control consists of all the related methods and measures adopted within an organization to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations. Internal control is very important because it discourages employees from fraudulent activities...
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...EVALUATION OF INTERNAL CONTROLS EVALUATION OF INTERNAL CONTROLS E LJB COMPANY 1100 Main St Kansas City, Missouri 64105 United States (816)943-7310 (816)943-7300 2/6/2013 LJB COMPANY 1100 Main St Kansas City, Missouri 64105 United States (816)943-7310 (816)943-7300 2/6/2013 Internal control is measures adopted within an organization to safeguard its assets, enhance the reliability of accounting records, increase efficiency of operations, and ensure compliance with laws and regulations (Kimmel, Weygandt, Kieso, 2009). This document analyzes both LJB Company strengths and weaknesses and provides recommendation on internal control measures. Internal control is measures adopted within an organization to safeguard its assets, enhance the reliability of accounting records, increase efficiency of operations, and ensure compliance with laws and regulations (Kimmel, Weygandt, Kieso, 2009). This document analyzes both LJB Company strengths and weaknesses and provides recommendation on internal control measures. TABLE OF CONTENTS Introduction * Overview of Internal Controls * Importance of Internal Controls * The Sarbanes-Oxley Act of 2002 (SOX) Components of Internal Controls * A control environment * Risk assessment * Control activities * Information and communication * Monitoring Principles of Internal Control Activities * Establishment of responsibility * Segregation of duties * Documentation procedures * Physical...
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...Case Study 2 ACCT 504 Group A December 2, 2012 LJB Company Internal Controls Evaluation For the President of the company Prepared by Group A Accounting Firm December 2, 2012 Table of Contents: I. Introduction – Stating the Issue II. Body of the Report – LBJ Company Findings and Analysis III. Summary and Conclusions – Findings Communicated to the President and Recommendations IV. Work Cited – References to support Recommendations Introduction: The purpose of this document is to discuss the internal controls and why the principle activities are important for a business to operate effectively. Our goal is to make the necessary recommendations and evaluate the system for future planning. We hope to uncover any issues that will prevent the company’s productivity. We’ll submit our recommendations to correct and improve the current system in place. In conclusion we’ll present our analysis to the President along with the recommendations needed to implement a better system of internal control. Issues: There’s an issue with too much responsibility placed on one employee. The accountant serving as the controller and treasurer creates a problem with documentation as you don’t have anyone to verify cash and revenue is accounted for correctly. It’s too easy for one employee to manipulate the books in his favor without a clear segregation of duties. The accountant is leaving checks in his office during the week exposing sensitive information and increasing...
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...Recommendation Brief for an Internal Auditor Candace L. Beard ACC 544 May 23, 2011 Joseph Poletti Recommendation Brief for an Internal Auditor Internal auditing helps companies to look at ways of improving and achieving short-term and long-term objectives. Internal auditors are hired to perform internal audits that look at a company’s operations, investigating fraud, financial reporting, safeguarding assets, and compliance of the laws and regulations set for companies. The internal auditors are employed to improve a company’s internal controls. Effective working internal controls detect and prevent fraud that is tested by internal auditors. Benefits of Internal Auditor Understanding the benefits of an internal auditor will help in the decision of hiring an internal accountant. Internal auditors verify the effectiveness of their organization's internal controls and check for mismanagement, waste, or fraud. They examine and evaluate their firms' financial and information systems, management procedures, and internal controls to ensure that records are accurate and controls are adequate. They also review company operations, evaluating their efficiency, effectiveness, and compliance with corporate policies and government regulations (Bureau of Labor Statistics). As an internal auditor he or she will be able to look for any mistakes and address them in the reports. Finding a professional to fill the role of an internal auditor benefits the structure of a growing business...
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...Introduction Internal control methods and measures are adopted to safeguard assets, enhance accuracy and reliability of accounting records, increase efficiency of operations and ensure compliance with laws and regulations. Control environment. The management style and the expectations of upper‐level managers, particularly their control policies, determine the control environment. An effective control environment helps to ensure that established policies and procedures are followed. The control environment includes independent oversight provided by a board of directors and, in publicly held companies, by an audit committee; management's integrity, ethical values, and philosophy; a defined organizational structure with competent and trustworthy employees; and the assignment of authority and responsibility. Control activities are the specific policies and procedures management uses to achieve its objectives. The most important control activities involve segregation of duties, proper authorization of transactions and activities, adequate documents and records, physical control over assets and records, and independent checks on performance. A short description of each of these control activities appears below. • Segregation of duties requires that different individuals be assigned responsibility for different elements of related activities, particularly those involving authorization, custody, or recordkeeping. For example, the same person who is responsible for an asset's...
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...Internal Auditor Recommendation Brief The client has mentioned that it has an out-of-control system and is in need of direction, organization, and establishing appropriate controls. Because of the increased attention surrounding increased operating expenses, speculative transactions and corporate fraudulent activities by legislators, shareholders and the media has caused United States companies to focus on implementing and maintaining a comprehensive and effective system of internal controls. These corporations have enlisted the services of internal auditors or created an internal audit department aimed at reducing potential risks that may yield unfavorable results or exposure for the company. The Institute of Internal Auditors (IIA) states the objective of an internal audit assists organizations to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve effectiveness of risk management, control and governance processes (Louwes, Ramsay, Sinason, & Strawser, 2007). Benefits of employing the services of an internal auditor provide a certified individual who is familiar with the intricate details of the company and can integrate seamlessly into its established processes and controls. Also an internal auditor offers an independent and objective review of the company aimed at recognizing and developing controls, and while improving the efficiencies of various processes and controls with the company’s best interest in mind. In some...
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...Analysis of the WorldCom Internal Control Using the COSO Model The control environment 1. Integrity and ethical values Integrity and ethical values are the product of the entity’s ethical and behavioral standards, as well as how they are communicated and reinforced in practice. They include management’s actions to remove or reduce incentives and temptations that might prompt personnel to engage in dishonest, illegal, or unethical acts. They also include the communication of entity values and behavioral standards to personnel through policy statements, codes of conduct, and by example. In WorldCom, integrity and ethical values are absolutely abused. Specifically, Ebbers created a culture in which the legal function was less influential and less welcome than in a healthy corporate environment. He even did not include the company’s lawyers in his inner circle and appears to have dealt with them only when he felt it necessary. He let them know his displeasure with them personally when they gave advice-however justified-that he did not like. Under these special environment, Sullivan assured that they were not doing anything illegal and that he would take full responsibility for their actions. But actually, they were doing illegal actions totally. In addition, WorldCom’s growth through acquisitions led to a hodgepodge of cultures and people. These different cultures produced different ethical values that made the environment more complicated. Recommendations: If Ebbers brought...
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...Preparing LJB’s Internal Control Reporting for Public Trading LJB System of Internal Controls Case Study February 5, 2012 Prepared by Background LJB Company, a small local distributor business that realizes in order to go public in the future, the company must be in compliance of the law and may need to adopt stronger internal control principles. At the President’s request, an independent internal assessment of internal controls was conducted to evaluate areas of strength and weakness. Objective The objectives of this report are to provide an assessment of the existing controls and make recommendations that will safeguard the companies assets and help produce the most accurate financial information. 1. Inform new internal control requirements if the company decides to go public. 2. Advise what the company is doing right. 3. Advise areas for internal control principle improvements. Requirements for publicly traded U.S. corporations “Under the Sarbanes-Oxley Act of 2002, all publicly traded U.S. corporations are required to maintain an adequate system of internal control, and independent outside auditors must attest to the system’s adequacy. Failure to comply can result in company fines and prison for officers. These internal controls will help reduce errors in the accounting reporting process, safeguard assets, in addition to possible efficiency gains in operations to ensure compliance with laws and regulation.”1 “Auditors are required to...
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