...Case Study 2 With deciding to go public; LJB Company would be required to follow the Sarbanes-Oxley Act; which stated that all public traded U. S. corporations are required to maintain an adequate system of internal control. As the President of the company it will be both your responsibility of the board of directors to make sure that the internal controls are reliable and effective. You must also hire an independent outside auditor to come in periodically to ensure the adequacy of the company’s internal control system. TO ensure that you will be set up to meet all the internal control requirements by the time LJB goes public, this report will list the requirements of internal control and state what your company is currently doing correct and that can help the company meet the internal control standards. Internal control is defines as all the related methods and measures adopted with an organization to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations. It has five primary components, a control environment, risk assessment, control activities, information and communication, and monitoring. These components are broken down further into six principles. These principles are establishment of responsibilities, segregation of duties, documentation procedures, physical controls, independent internal verification and human resource controls. By following the guidelines of these...
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...ACC 504 Case Study 2 DeVry Keller School of Graduate Management Publicly Traded Companies Internal Control Requirements Becoming a publically traded company is a big decision. LBJ would have to weigh the cost versus the benefit. Investors want accurate records of the company’s earnings and finances. There are certain rules that a publically traded company must adhere to in order to be in compliance with the Sabarnes Oxley Act or (SOX). For smaller companies with less than 125,000,000 in revenue becoming publically traded and compiling with SOX can be a significant obstacle. “A company must have a set of rules in place that act as internal controls to prevent fraud and detect it when it does occur. In addition to maintaining internal controls a company must also hire an independent auditor to attest that the internal controls are adequate and working. The company’s executives and board of directors must ensure that these controls are reliable and effective (Kimmel, 2013)”. Although it is not required, most publically traded companies have established a code of conduct and also an ethics board to review questionable actions and decisions made. When there is a system in place that gives guidance and management supports that system it is less likely that an employee will be able to commit fraud or other unethical activities. Fraud can occur when there is opportunity, a perceived need due to financial pressure, and rationalization, what I am doing isn’t wrong. Preventing...
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...Executive Summary The need for auditors with technology skills have increased, this is why the IT auditing profession has become very important. Information Technology auditors analyze the information technology structure, operations, and software of an organization. They are in charge of identifying better ways in which the organization’s systems can meet their needs in a better and more reliable way. IT auditors can basically design new systems by configuring hardware and software programs and they also test the systems to make sure they are working properly. Most IT auditors work in offices, obviously with computer systems. Some IT auditors work with the same company for years making sure the information systems and internal controls work properly. Some other IT auditors work for CPA firms that provide auditing services, and are required to travel to evaluate the information systems of clients. For the most part IT auditors work independently, but when they are assigned to larger and/or complicated projects, they use the collaboration of other peers. James Reinhard, CPA, CIA, CISA, manager of Simon Property Group Inc. who has more than 20 years’ experience in IT and integrated auditing states that “The ideal IT auditor should be able to discuss IP routing with the network folks in one hour and financial statement disclosures with the controller in the next” (Scharf, 2008). To become the ideal IT auditor IT audit certifications are the best option. IT audit...
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