Preparing Ljb’s Internal Control Reporting for Public Trading

Internal control

ACCT504 Financial accounting and Managerial use, analysis

Student : Aigul Rysmanova, ID: D40285115

Keller Graduate school of Management

Professor : Linval Frazer

Week 5: Case study 2

Friday , April 4, 2014

Preparing LJB’s Internal Control Reporting for Public Trading

Background LJB Company , a small business local distributor who understands to go public in the future, the company should be in accordance with the law and may need to take more stringent internal control principles . At the request of the president , an independent internal evaluation of internal controls was conducted to evaluate the direction of strength and weakness.

Objective The objectives of this report should evaluate the existing controls and make recommendations that will ensure the companies assets and help get the most accurate financial information.

Based on a system of internal checks and balances will be just in my recommendations to the president of the company, since most of the internal control systems provide for independent internal control; This principle involves the review of data prepared by employees. To get the maximum benefit from an independent internal control :

Control values and Integrity from the top make it clear that it is unethical activities will not be accepted , and set the tone for the company's culture . There are several principles of management :

1. Establishment of responsibility : management is most effective when a single source may be responsible for the problem , including the authorization and approval of transactions.

Weakness: LJB has only one accountant who serves as treasurer and controller , which can optimize the processes , but it creates an inherent risk . Cashier handled informally . Accountant is so busy that the company handles the checkout bit differently . All employees have access to the petty cash drawer and just put a note asking if they use any of the cash.

Recommendation:

* Align the specific obligations of employees to limit access to authorized employees so that the buyer is not the same person who authorizes the payment without the approval of the head at least . Otherwise , a person may make payments that are made to yourself.

* Use unique passwords per employee to protect the purchasing system to provide adequate documents and records management.

* Assign petty cash custodian.

2 . Segregation of duties : " After one