Prepared by Jack Jackson for LJB Company
August 11th, 2013
The purpose of this report is to evaluate the internal control systems at LJB Company. The report will cover current systems that are successfully working properly and current systems that can be improved to help the company be more successful and avoid any unneeded exposure to litigation, theft or extra liability. The report will also evaluate the need for indelible ink printing machine in order to streamline the process of manually writing checks. Finally we will evaluate the need for petty cash and the other manual process that are currently in place at LBJ Company.
This report would first will first give an explanation of what internal control systems consist of so that everyone has an accurate and consistent definition of control systems.
“Control Environment”- This is the responsibility of management to create and communicate internal control policies that ensure that all employees understand the ethical and no tolerance environment in which the company operates.
“Risk Assessment”- These are the current or potential risks that we can identify as a company.
“Control Activities”- These are the policies and action in which we can create to curtail fraud, or ethical activities that violates the companies polices.
“Monitoring”- This is something that LBJ Company must to frequently to ensure that the companies polices are being followed and enforced both up and down the organization.
Internal Accounting and Systems Audit
The following findings have been found to be a successful policy that aligns with the current internal control systems and can help the company stay within policy guidelines.
The purchase of products: As the acting controller purchases supplies and pays for those supplies in check form the debit is then entered into the registry and then reconciled at the end of the month with the proper documentation attached. Although this is a very manual process and can be time consuming it meets all the requirements for LBJ Companies internal control system. A vast improvement of these policies would be to automate these purchases on a monthly or quarterly basis through a supplier and we can be billed electronically and those purchases can be electronically put into the accounting system. If the company decides to go