Premium Essay

Acct 504

In: Business and Management

Submitted By billykid20
Words 744
Pages 3
William Schall
Case Study 2
Accounting 504
The five internal controls are:
Smart Hiring Practices and Separation of Duties. In a business with good internal controls, no important duty is overlooked. Each person in the information chain is important. The chain should start with hiring. Background checks should be conducted on job applicants. Proper training and supervision, as well as paying competitive salaries, helps ensure that all employees are sufficiently competent for their jobs. Employee responsibilities should be clearly laid out in position descriptions.
Comparisons and Compliance Monitoring. No person or department should be able to completely process a transaction from beginning to end without being cross-checked by another person or department.
Adequate Records. Accounting records provide the details of business transactions. The general rule is that all major groups of transactions should be supported by either hard copy documents or electronic records.
Limited Access. To complement segregation of duties, company policy should limit access to assets only to those persons or departments that have custodial responsibilities.
Proper Approvals. No transaction should be processed without management’s general or specific approval. The bigger the transaction, the more specific approval it should have. For individual small transactions, management might delegate approval to a specific department.
Situation a. In evaluating the internal control over cash payments of Yankee Manufacturing, an auditor learns that the purchasing agent is responsible for purchasing diamonds for use in the company’s manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent’s work.
Problems: Comparisons and Compliance Monitoring, Adequate Records and Proper Approvals.
Solutions: Yankee manufacturing breaks…...

Similar Documents

Premium Essay

Case Study 2 Acct 504

...Case Study 2- Internal Control Improving LJB Company Internal Control ACCT 504 Felix M. Fair October 6, 2012 Table Of Contents: 1. Introduction pg. 3 2. Proper Development of Internal Control pg. 3 3. Effective LJB Practices pg. 3-4 4. Areas for Improvement pg. 4 5. Conclusion pg. 5 6. References pg. 6 Improving LJB Company Internal Control Introduction This paper is an academic work that will define, identify, and explain the use of Internal Control within a company, as well as applying the principles of internal control activities. These principles will be reflected in the use of new requirements, comprehensive feedback of where LJB is currently and where they can be with improvement of Internal Control and the application of its principles. Proper Development of Internal Control What is Internal Control? Internal control makes up all methods that are adopted within an organization to safeguard assets, enhance the reliability of accounting records, increase operational efficiency, and ensure compliance with laws and regulations. [Kimmel (). Financial Accounting [6] (VitalSource Bookshelf), Retrieved from......

Words: 998 - Pages: 4

Premium Essay

Acct 504 Course Project

...income (expense), which were immaterial for all periods presented. Other than those derivatives entered into for investment purposes, such as commodity contracts, the gains (losses) below are generally economically offset by unrealized gains (losses) in the underlying available-for-sale securities. ||||||||||||| (In millions)| | | | | | | | | | || |||| Year Ended June 30,| |2011| | |2010| | |2009| | |||| Foreign exchange contracts| |$| (27|) | |$| 106| | |$| (234|) | Equity contracts| | |35| | | |12| | | |(131|) | Interest-rate contracts| | |19| | | |(4|) | | |5| | Credit contracts| | |24| | | |22| | | |(18|) | Commodity contracts| | |148| | | |(1|) | | |(126|) | || |||| |||| Total| |$|199| | |$|135| | |$|(504|) | | |||| |||| |||| 62 Table of Contents PART II Item 8 NOTE 6 — FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present the fair value of our financial instruments that are measured at fair value on a recurring basis: ||||||||||||||||||||||||| (In millions)| |Level 1| | |Level 2| | |Level 3| | |GrossFairValue| | |Netting (a)| | |Net FairValue| | || ||||||| June 30, 2011| | | | | | | | | | | | | | | | | | | ||||||| Assets| | | | | | | | | | | | | | | | | | | ||||||| Mutual funds| |$|1,752| | |$|0| | |$|0| | |$|1,752| | |$|0| | |$|1,752| | Commercial paper| | |0| | | |639| | | |0| | | |639| | | |0| | |......

Words: 55776 - Pages: 224

Free Essay

Acct 504 Case Study 2

...ACCT 504 Case Study 2 Keller Graduate School DeVry University ABSTRACT There are several internal control requirements that need to be put into place if the company decides to go public. Those principals are establishment of responsibility, segregation of duties, physical controls, independent internal verification, documentation procedures and human resource controls. Establishment of responsibility is making sure that only designated personnel has the authority to handle certain financial responsibilities. Segregation of duties is ensuring that different individuals have different responsibilities. A physical control is having the proper items that need to be secure in a place that has limited access. Independent internal verification is having individuals confirm the information that is received by various departments to make sure there is accuracy in the documents and reports that are being reported. Documentation procedures is using proper documentation to keep records accurate and having supporting evidence for the transactions that had taken place to make sure that fraud has not occurred. Human resource is handling personnel issues such vacations, conducting background checks and issuing bond personnel for the individuals who handle cash. All of these internal control principals are important to protect the company’s assets, increase the effectiveness of the operations and ensure compliance with laws and regulations. These controls also heighten the...

Words: 1591 - Pages: 7

Premium Essay

Acct 504 Final Project

...Financial Accounting 504 23-Jun-13 Professor Chung Oracle v Microsoft Final Course Project As noted in Wikipedia Oracle is headquartered in Redwood, California. It was founded in 1977 and is the world's third largest soft wear developer in sales. According to Yahoo Finance Oracle is a multi-faceted operation. Oracle provides a vast amount of services for the internet and computer. It provides cloud applications, IT consulting services, licenses middleware software which includes database and database management. It has 115,000 full time employees and is run by co-founder, CEO Larry Ellison who has been the only CEO of the company since it's inception. Also noted in Wikipedia he is the top paid CEO in the world. In 2013 Oracle currently has an operating cash flow of 13.72B with revenues of 37.15B which can be found in Yahoo Finance. Microsoft is a leading software company started by Bill Gates and Paul Allen in 1975. The company's headquarters is located in Redmond, Washington where like Oracle it develops, licenses, manufactures and support a wide range of computing sources, as documented in Wikipedia. Yahoo finance reports that in addition to licensing and manufacturing software over the globe it also designs hardware and has recently entered into the hardware industry with it's new tablet. It also has a entertainment division which is responsible for the manufacturing of Xbox360 gaming and consoles, Kinect for Xbox and video games among other products. It has a......

Words: 1504 - Pages: 7

Free Essay

Acct 504 Case Study 2

...LBJ Company: Internal Control Evaluation Accounting 504: Managerial Use & Analysis Case Study 2 Written by: 8/10/13 This evaluation is being presented as an assessment of the preparedness of the LJB Company to go public at a future date. By researching current regulations regarding publicly traded firms we hope to prepare for a smooth transition into the trading market. The Sarbanes-Oxley Act of 2002 (SOX) has established the following guidelines for publicly traded corporations and require adherence for internal controls and procedures for financial reporting. Senior management and executives will be responsible for ensuring that controls are effective and reliable. Outside auditors must periodically verify the accuracy of and adherence to the internal controls. As part of the annual Exchange Act report, an internal control report will generated along with the information recorded during each fiscal year. It is recommended that the LJB Company adopt the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and remain in compliance with the SOX Act. This framework will follow six principles of internal control. 1) Establishment of Responsibility 2) Segregation of Duties 3) Documentation of Procedures 4) Physical Controls 5) Independent Internal Verification 6) Human Resource Controls Bruce Bulmer Consultations has completed its preliminary assessment of the current......

Words: 617 - Pages: 3

Premium Essay

Acct 504 Case Study 2

...Devry University LJB Company Internal Controls Eddie Daniel Velez ACCT 504 Professor Ramiro Serrano August 10, 2014 Table of Contents Introduction………………………………………………………………………………………..3 Public Trading……………………………………………………………………………………..4 Internal Controls…………………………………………………………………………………..5 Current Concerns………………………………………………………………………………….6 Summary…………………………………………………………………………………………..8 Works Cited……………………………………………………………………………………….9 Introduction: This report is used for the purpose of evaluating internal controls with the company stated: LJB Company Inc. LJB plans on going public in the near future and has enlisted the help of Serrano Accounting Services (SAS) to prepare a formal document discussing changes that need to be made in the company before going public is plausible. This report will discuss some of the current procedures at LJB with the proper recommendations to help streamline the process of becoming a public company along with any concerns the President might have and wishes to have addressed. Public Trading: LJB wishes to move forward and become a publicly traded company. First of all I want to thank for choosing SAS with all of your accounting needs. We are honored to help with this report and hopefully future endeavors. First we will review any regulations regarding private companies converting to public entities. One of the many added benefits of going public is it shows consumers, and investors a strong corporate governance. Under......

Words: 1155 - Pages: 5

Premium Essay

Acct 504 Case 2

...Prepared for LJB Company President Evaluation of Internal Controls Prepared by XXXX XXXXX xxxx@msn.com ACCT 591 Acct Fin: Managerial Use,Anlys XXXXXXXXXXXXXX September 12, 20xx DeVry University Table of Contents Introduction of Evaluation 2 New Regulations – Public vs. Private 3 Current Internal Controls – Good 4 Current Internal Controls – Need Improvements 5 Reflection 7 References 8 Introduction of Evaluation My accounting firm was asked to evaluate the LJB Company for evidence of Internal Control issues. It is also my understanding that your company, LJB Company, wishes to move forward and become a public entity. I’m pleased my firm can be of assistance in helping your company make this transaction. First, we must review any new rules or regulations that apply to private companies converting public. Good corporate governance within an organization may make a company more attractive to potential buyers, investors, and other capital sources. Under Sarbanes-Oxley, all public traded companies must follow a set of new controls. U.S. corporations are required to maintain an adequate system of internal controls. Corporate executives and boards of directors must ensure these controls are reliable and effective. As with any business, the transformation of going from a private to public requires some extensive planning and preparation. It is recommended LJB being a relatively small sized company in terms of its employees should re-evaluate the...

Words: 2028 - Pages: 9

Premium Essay

Acct-504 Final Project

...Financial Analysis of Hershey and Tootsie Roll Keller University ACCT-504 Instructor: Financial Analysis of Hershey and Tootsie Roll Introduction Tootsie Roll and Hershey are two similar companies with a similar product offering, but they operate on entirely different scales. In an effort to determine the better investment of the two companies we will utilize multiple financial analysis ratios to gauge the health of the respective companies in terms of liquidity (the ability to pay short-term liabilities and respond to opportunities), solvency (the long-term viability of the company) and profitability (the efficiency at which the can turn it’s resources into profits). However, the snapshot picture of health that a single years worth of financial statements provide is not enough. Below we have offered a horizontal analysis of the respective companies to show the change in their health from 2012 to 2013 and analyzed the two companies against each other to show why we recommend Hershey as the better investment. Liquidity and Solvency Current Ratio The current ratio is defined as the current assets divided by the current liabilities for a given period. This ratio is important because it helps measure a company’s ability to pay their current liabilities with their current assets. This shows helps determine the liquidity of the companies and their ability to respond to market......

Words: 1270 - Pages: 6

Premium Essay

Case Study 3, Acct 504

...stock, and cash sales | Disbursements - Purchases of inventory, Operating Expenses, Selling and administrative expenses, dividends, and equipment purchases | Financing- Borrowing and repayments | | | | | | Why is a cash budget so vital to a company? | A cash budget helps a company or an individual manage cash by planning reciepts and payments during a future period. | Harrison, Walter T., Charles T. Horngren, and William Thomas. Financial accounting. 9th ed. Upper Saddle River, NJ: Pearson Learning Solutions, 2013. | A company must forecast their expected costs by the flow of cash and to do this they need to make sure they can cover projected cash received | | "Acct 504 Case Study 3 Answers by Jenna54221." StudyMode. http://www.studymode.com/essays/Acct-504-Case-Study-3-Answers-1383822.html (accessed June 15, 2014). | | | What are the five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash? | | Increase the speed of receivables collection, keep inventory levels low, delay payment of liabilities, plan timing of major expenditures, and invest idle cash | | Business. (n.d.). - Term Paper. Retrieved June 11, 2014, from http://issuepoints.com/essay-on/Business/49033 | | | | | | | | | | |...

Words: 555 - Pages: 3

Premium Essay

Acct 504 Course Project

...An Examination of LBJ Distribution Company Internal Controls Infrastructure Pre IPO ACCT 504: Financial Accounting Keller Graduate School of Management Professor Ganesh Pandit Date: February 9, 2014 Pre IPO Examination of LBJ Distribution Company Internal Controls Infrastructure Prepared for: President, LBJ Distribution Company Prepared By: Véron S.A. Lake Company: LLMCO Date: 9 February 2014 Table of Contents Introduction 3 Purpose 4 Legal Requirement of Internal Controls 5 IPO Readiness: Financial Internal Controls 5 IPO Readiness: Recommendations 6 Reliable Monthly Reports 6 Adequate Staffing of Financial Departments 6 Implementation of Audit Infrastructure 6 IPO Readiness: LBJ Internal Control Strengths 7 Pre-numbered Invoices 7 Recommendations: Indelible Ink Machine 7 IPO Readiness: LBJ Internal Control Weaknesses 7 Staffing: Accounting Department 7 Staffing: Human Resource Department 8 Recommendations: Handling Petty Cash 8 Recommendations: IT Department Physical Controls 9 Conclusion 9 Works Cited 10 Introduction A company going public today is different than what it was in the dot com era; this is because the IPO landscape has changed significantly in the last decade (KPMG, 2013). Recently experts has seen compression in the markets, decreasing or shifting mergers and acquisition activity, faltering businesses and more scrutiny on balance sheets and company cash as well as access to capital (KPMG, 2013;......

Words: 1816 - Pages: 8

Premium Essay

Acct 504 Course Project

...An Examination of LBJ Distribution Company Internal Controls Infrastructure Pre IPO ACCT 504: Financial Accounting Keller Graduate School of Management Professor Ganesh Pandit Date: February 9, 2014 Pre IPO Examination of LBJ Distribution Company Internal Controls Infrastructure Prepared for: President, LBJ Distribution Company Prepared By: Véron S.A. Lake Company: LLMCO Date: 9 February 2014 Table of Contents Introduction 3 Purpose 4 Legal Requirement of Internal Controls 5 IPO Readiness: Financial Internal Controls 5 IPO Readiness: Recommendations 6 Reliable Monthly Reports 6 Adequate Staffing of Financial Departments 6 Implementation of Audit Infrastructure 6 IPO Readiness: LBJ Internal Control Strengths 7 Pre-numbered Invoices 7 Recommendations: Indelible Ink Machine 7 IPO Readiness: LBJ Internal Control Weaknesses 7 Staffing: Accounting Department 7 Staffing: Human Resource Department 8 Recommendations: Handling Petty Cash 8 Recommendations: IT Department Physical Controls 9 Conclusion 9 Works Cited 10 Introduction A company going public today is different than what it was in the dot com era; this is because the IPO landscape has changed significantly in the last decade (KPMG, 2013). Recently experts has seen compression in the markets, decreasing or shifting mergers and acquisition activity, faltering businesses and more scrutiny on balance sheets and company cash as well as access to capital (KPMG, 2013;......

Words: 1816 - Pages: 8

Free Essay

Acct 504 Case Study 2

...LJB Company: Internal Control Evaluation Acct: 504 Case Study 2 Prepared by: Lennard Razor Prepared for: LJB Company 11/29/2014 LJB, 1 Table Of Contents Introduction: LJB Company Assessment 2 LJB Company: The Transition 3 Summary 5 Works Cited 6 LJB, 2 Introduction: LJB Company Assessment The overall purpose of this document is to assess the current state of the LJB Company. This assessment will thoroughly diagnose all of the components, both good and bad, used by LJB Company to help determine the company’s readiness to go public. Upon assessing all of the components and regulations currently utilized by LJB Company, I will also make recommendations for the improvement and future success of this company moving into the public market. In order to properly perform an assessment of the LBJ Company, there first had to be some set of standards or regulations that outline the internal controls and proper procedures for companies and businesses to adhere to for financial reporting. As it turns out internal control is a key component of Foreign Corrupt Practices Act(FCPA) of 1977 and the Sarbanes-Oxley Act(SOX) of 2002 which required companies to follow this set of internal controls. This list of internal controls is as follows: 1). Conduct its business in an orderly and efficient manner, 2). Safeguard its assets and resources, 3)...

Words: 939 - Pages: 4

Free Essay

Acct 504

...Case Study Two Situation A. The missing component here is; Ensure accurate, reliable accounting records. I say this because there is no one going behind the purchasing agent to review his or her work. The purchasing agent is responsible for the purchasing of the diamonds, the approving of the purchasing agreement and signing of the check. Without proper controls, records may be unreliable, making it impossible to tell which part of the business is profitable and which part needs improvement. I would recommend that a supervisor or other higher manager approve the invoices for payment and sign the checks. This would ensure the accuracy of the purchases and the records that the company keeps. Situation B. This missing component here is; Promote operational efficiency. This is because when the owner of the firm is away two of the senior architects tends to take over the work of the office manager which results in poor performance of their normal duties. This is not the most efficient use of the company’s use of employee resources. I would recommend that the owner hires a permanent office manager so that while she is away with clients she will not have to worry about other senior architects neglecting their work because they feel the need to step up in her absences. Situation C. For this situation I believe that the missing component Comply with legal requirements. This states that companies, like people, are subject to laws, such as those of regulatory agencies like the......

Words: 377 - Pages: 2

Premium Essay

Acct 504 Week 3 Case Study 1 Flower Landscaping Corporation

...ACCT 504 WEEK 3 CASE STUDY 1 FLOWER LANDSCAPING CORPORATION A+ Graded Tutorial Available At: http://hwsoloutions.com/?product=week-3-case-study-1-flower-landscaping-corporation Visit Our website: http://hwsoloutions.com/ Product Description ACCT 504 Week 3 Case Study 1 Flower Landscaping Corporation, JOURNAL Entries July 19 Made payment on account to Lakeside Company, $400. July 31 Received cash for landscaping revenue for the last half of July, $2,620. July 31 Declared and paid cash dividend of $1,600. Prepare journal entries to record the July transactions in the General Journal below. Use the following account names for journal entries. General Journal Chart of Accounts: Account Title (Normal Balance) Date Description(Account Name) Debit Credit 1-Jul Assets Cash 24,000 Cash (Debit) Common Stock 24,000 Prepaid Insurance (Debit) Landscaping Supplies (Debit) 1-Jul Prepaid Insurance 2,400 Landscaping Equipment (Debit) Cash 2,400 Accum Depr -Equipment (Credit) 1-Jul Rent Expense 2,080 Liabilities Cash 2,080 Accounts Payable (Credit) Income Tax Payable (Credit) 3-Jul Landscaping Equipment 8,800 Cash 1,200 Stockholders Equity Accounts Payable 7,600 Common Stock (Credit) Retained Earnings (Credit) 8-Jul Landscaping Supplies 780 Dividends (Debit) Accounts Payable 780 Revenue 12-Jul Utility Expense 308 Landscaping Revenue (Credit) Cash 308 Expenses 16-Jul Cash 2,724 Rent Expense (Debit) Landscaping Revenue 2,724 Utility Expense......

Words: 514 - Pages: 3

Premium Essay

Acct 504

...Week-2 Case Study ACCT504 Acct Fin: Managerial Use Analysis Callistus Wong Professor Saad November 27, 2015 Situation A. In evaluating the internal control over inventory for the Williams Oil Services Company, an auditor learns that the warehouse receiving clerk is responsible for ordering parts for supply inventory use in drilling services, counts the inventory when received at the dock, records the receipts into the inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk’s work. Missing Internal Control Characteristic: The important missing factor is that same person is responsible for conducting all the activities of inventory. He is responsible for ordering parts, counting the inventory, recording inventory ledger and taking up of annual stock. Problem of the Firm: The firm is not having any internal control mechanism to check the authenticity of documents and physical inventory of stores. Same person who might encourage any person to commit a willful fraud is performing all the duties. Proposed Solution: Segregation of duties is one of the methods of internal which helps in preventing and reducing the occurrence of frauds and errors. It is done by segregating the duties in a department and by ensuring that no single person is having control on all the transactions. Duties are divided into four general categories: Authorization Record keeping Custody Reconciliation. Different employees should perform all these major...

Words: 815 - Pages: 4

Tokyo ghoul 3 season dub | Mighty B! Hier kommt Bessie | Auto-Anbau- & -Zubehörteile