For the company to go public, the following internal control is required
Internal audit on company financial and business processes and transactions
Compliance with Sarbanes-Oxley Act Regulations
Implementation of better security measures for data protection, identity protection and ensuring that company resources are not misused
Compliance with SEC, GAAP and IFRS procedures to record all transactions
2. Advise the president of what the company is doing right (they are doing some things well), and also recommend to the president whether or not they should buy the indelible ink machine. When you advise the president, please be sure to reference the applicable internal control principle from your textbook that applies. (13 points)
LJB Company have mastered some of the regulations associated with Sarbanes-Oxley Act and GAAP guidelines and it is my suggestion that they continue with
The relationship built with long term employees because that creates loyalty and trust
Ensuring that checks are been collected timely and monthly bank reconciliation statements are completed.
Pre-numbered invoices are used for accounting
Ability for the accountants to do multiple functions like managing accounts and streamlining many of their processes
Requirement for purchasing the indelible machine
I would advice the company to procure the item because having the machine would enable the company to be efficient in processing checks and tracking payments, which will yield better transaction records.
The indelible machine would transform the company’s technology capability by automating the accounting department thereby making it more efficient as the company continues to grow as well as increase in transactions.
3. Advise the president of what the company is doing wrong (they are definitely doing some things poorly). Please be sure to include the internal control principle from your textbook that is being violated along with a recommendation for improvement. (20 points)
You must prepare a formal report for the partner to distribute to the president, so no abbreviations or short-hand answers. You also must cite your references. At a minimum, your textbook should be cited.
LJB Company should consider the following recommendations outlining some of the discrepancies and deficiency found during my observation.
Petty cash handled by multiple parties: It is recommended that cash should be handled by only one person, and is therefore accountable. In addition to that, all transactions (cash in particular) to be entered into a financial software
Accountant doing two roles “treasurer” and “controller job”: It is recommended that there is a fine separation of duties to ensure both roles are performed effectively
Employee with a criminal background recruited: It is mandatory to perform background checks for new hires.
No blocking of harmful or restricted websites: It is recommended that the company implement software that automatically blocks harmful or inappropriate sites thus ensuring that people are not able to