Internal Control Case Study
LJB Company’s Internal Control
Recommendation Report
February 2012
Prepared for:
LJB Company
President
Finance Department
Prepared by: Cauretta Bell
Recommendation Report 2012
It is my immense pleasure to report and evaluate the findings of the internal control procedures to the President of LJB Company regarding recommended changes for the organization to utilize internal control requirements. We will provide useful recommendation so that LJB Company will be fully prepared to go public in the near future. Being completely open to our recommendation, the President of LJB Company can expect the organization proficiency level of internal control will secure assets, improve the trustworthiness of the accounting records, amplify efficiency of operations, and guarantee compliance with laws and regulations. In order to accomplish this success, LJB would need to apply five primary components that are consistent of control environment, risk assessment, control activities, monitoring, information and communication. The internal control activities establish simple principles such as: segregation of duties, establishment of responsibility, physical controls, human resource controls, independent internal verification, and documentation procedures. The activities presented are the backbone in a company’s efforts to identify and address the risks a company faces, such as fraud. Segregation of Duties
The most indispensable internal control system would be segregation of duties. With LBJ main purpose going public the company would benefit from Segregation of duties should the President correct the violated principle due to the individual responsible for the record keeping of this asset should be separated from the physical custody of that asset. The trusted account is the individual that presently retrieves all the paychecks on payday and the checks are placed in the safe in his office after the account is gone for the day. Evaluating this method the accountant
Recommendation Report
February 2012
Prepared for:
LJB Company
President
Finance Department
Prepared by: Cauretta Bell
Recommendation Report 2012
It is my immense pleasure to report and evaluate the findings of the internal control procedures to the President of LJB Company regarding recommended changes for the organization to utilize internal control requirements. We will provide useful recommendation so that LJB Company will be fully prepared to go public in the near future. Being completely open to our recommendation, the President of LJB Company can expect the organization proficiency level of internal control will secure assets, improve the trustworthiness of the accounting records, amplify efficiency of operations, and guarantee compliance with laws and regulations. In order to accomplish this success, LJB would need to apply five primary components that are consistent of control environment, risk assessment, control activities, monitoring, information and communication. The internal control activities establish simple principles such as: segregation of duties, establishment of responsibility, physical controls, human resource controls, independent internal verification, and documentation procedures. The activities presented are the backbone in a company’s efforts to identify and address the risks a company faces, such as fraud. Segregation of Duties
The most indispensable internal control system would be segregation of duties. With LBJ main purpose going public the company would benefit from Segregation of duties should the President correct the violated principle due to the individual responsible for the record keeping of this asset should be separated from the physical custody of that asset. The trusted account is the individual that presently retrieves all the paychecks on payday and the checks are placed in the safe in his office after the account is gone for the day. Evaluating this method the accountant