Premium Essay

Acct504 Case Study 2

In: Other Topics

Submitted By purvipatel12
Words 1613
Pages 7
Accounting 504 Case Study 2

Keller Graduate School of Management
Prepared by: Purvi Patel
Prepared for: Professor Ganesh
3 Oct, 2013

To: LJB Company President
From: Purvi Patel, Accounting firm
Subject: Evaluation of LJB Company’s Internal Control Structures
Date: 3 April 2013

Hello LJB Company President:

First, I would like to thank you for hiring my accounting firm to evaluate LJB’s internal controls system. This report will inform you of any new internal control requirements required for LJB to go public, advise you of what the company is doing right, recommend that LJB purchase an indelible ink machine and advise you what areas the company can improve.

Introduction

After observation LJB’s operations, I have determined LBJ needs to make changes regarding its internal controls system. All publically traded companies operations’ must comply with the Sarbanes-Oxley Act (SOX) accounting standards. As cited in by Kimmel (2011), complying with the internal controls practices set forth by the SOX act prevents fraud, encourage efficiency and effectiveness of operations, and insure a company is in compliance with applicable laws. The internal control standards outlined by the SOX act include a control environment, risk assessment control activities, information, communication and monitoring.

NEW INTERNAL CONTROL REQUIREMENTS FOR GOING PUBLIC

Sarbanes-Oxley Act of 2002 (SOX), enacted on July 29,2002, is a United States Federal law that imposed new rules and regulations for all US public companies.

Under SOX Section 404, all publicly listed corporations are required to maintain an adequate system of internal control. Under SOX, Corporate Executives and the board of directors are personally responsible for making sure that the internal controls in place are effective and reliable. Independent auditors should also attest to the reliability of…...

Similar Documents

Premium Essay

Case Study 1 Acct504

...the person in charge of petty cash to the Treasurer on a monthly basis to be entered into the company’s accounting system before additional funds is allocated into the petty cash. Moreover, petty cash must be kept locked up at all times. e) Having a person in charge of the hiring processes can protect the organization from all the various employment laws governing organizations and employees. With the organization’s strong faith in their long-term employees, having a human resources professional will have greater influence on employee satisfaction, engagement and retention. These individual gains support for enhancing employee skills and training employees which are the most effective ways to improve productivity and employee engagement.2 The President can still take part in the interview process in partnership with human resources professional who will be responsible for background and reference checks of employees, understands hiring processes and employment law. Human resources professionals are knowledgeable and specialized in undertaking the hiring processes responsibilities and disciplinary measures of employees. The Treasurer can focus on his expertise. f) The use of an indelible ink machine to print company checks violates the segregation of duties because the responsibility for record keeping for an asset should be separate from the physical custody of the asset. When one individual is responsible for all of the related activities, the potential for errors......

Words: 2041 - Pages: 9

Premium Essay

Case Study 2

...Case Study 2 2. What role did top management commitment play in developing the ethical work climate and organizational performance seen at Alcoa? What other ethical safeguards are mentioned in the case to support the company's effort at developing a strong ethical culture? Management role is always vital in any work climate and in that respect the role that Alcoa played cannot be ignored. From the beginning the company incorporated their values and documented what they thought was relevant regarding health and safety of their employees. Furthermore, they devised a plan for employees to follow the codes of health and safety so the company could achieve their goal of providing for stakeholders. The company considered the U.S. Federal Sentencing Guidelines, and Sarbanes-Oxley Act with all of the basic elements included. 4. Can Alcoa's "values in practice" be adopted by other organizations as a universal set of ethical standards leading to ethical employee behavior? Measures that Alcoa implemented were crucial to setting a standard for universal ethical codes and enhanced the ability of each employee to act in an ethical way. Furthermore, by employees complying with polices and procedures set by Alcoa, this created an environment of success for all. Elements of ethics and compliance program include: • Publishing the Guide to Business Conduct and other directional documents; • Deploying global business conduct training and communications to all......

Words: 327 - Pages: 2

Premium Essay

Case Study 2 Prompt Acct504

...Case Study 2 -Internal Control Due by Sunday of week 5, 11:59PM, Mountain Time LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The President wants to be aware of any new regulations required of his company if they go public so he met with a colleague of yours at a local restaurant. The President of the company explained the current system of internal controls to your colleague. Your colleague has since been promoted to a tax position so she has passed on the information below so you can generate recommendations for the partner at your accounting firm to share with the President of LJB Company. Since LJB Company is a relatively lean organization, they have a lot of faith in their long-term employees. They have one accountant who serves as Treasurer and Controller which streamlines many of their processes. In this dual role, he purchases all of the supplies and pays for these purchases. He also receives the checks and completes the monthly bank reconciliation. The accountant is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. The accountant has recently started using pre-numbered invoices and wants to buy an indelible ink machine to print their checks. The President is waiting to hear from you if this is a necessary......

Words: 913 - Pages: 4

Premium Essay

Case Study 2

...Case Study 2 Leti Raduca BUSI-642 Dr. Quatro September 8th, 2013 Case Study 2 What elements, discussed in the case study, are important for someone who works in the field of human resources? Human Resources department it is one of the most important departments when it comes to quality of personnel and their placement inside the company (Maxwell, 2001). In any organization, people are the most challenging resource to manage; therefore Human Resources representatives should be very vigilant when hiring new people. One of the few important things an HR representative needs to ensure is, that each new employee would fit into the company culture, understand each individual way of learning and craft a program for each individual employee or perhaps for groups of employees that match each other learning style and personality. The new Human Resource managers need to move from the traditional way and to the new way. This case study provides few brilliant examples of how and why this should occur and offers understanding of what features are essential for the people that are working in this field. An important element provided within this case study that it is needed to someone that works with in the field of Human Resources is the development of new skills, implementing and effectively manage the “workforce of one”. For example, having a broad background and experience in different fields, such as marketing, customizing programs for employees, training, being......

Words: 1009 - Pages: 5

Premium Essay

Case Study 2 : Scotland

...Extended Case Studies (Set 2) [INTERMEDIATE 2] [pic] The Scottish Qualifications Authority regularly reviews the arrangements for National Qualifications. Users of all NQ support materials, whether published by LT Scotland or others, are reminded that it is their responsibility to check that the support materials correspond to the requirements of the current arrangements. Acknowledgement Learning and Teaching Scotland gratefully acknowledge this contribution to the National Qualifications support programme for Business Management. © Learning and Teaching Scotland 2006 This resource may be reproduced in whole or in part for educational purposes by educational establishments in Scotland provided that no profit accrues at any stage. Contents Introduction 4 Case Study 1: Mined Matters 7 Case Study 2: Is it Only a Game? 13 Case Study 3: Gardners Take the Biscuit 18 Case Study 4: Tanfastic!! 24 Introduction This resource is to support the learning and teaching process for Business Management at Intermediate 2 level. It consists of four case studies, each of which is accompanied by a number of questions. Each question has been allocated marks and, in each case, the total number of marks is 25. There are also suggestions on the type of answers that could be considered as a suitable response to the question. The case studies The case studies have a number of features: • They are longer than the case......

Words: 6378 - Pages: 26

Free Essay

Acct504 Case Study 2

...LJB Company: Internal Controls. This proposal will inform the president of the new internal control requirements necessary if the LJB Company is to go public. This proposal will also inform the president of the already properly functioning internal controls, and the purposed purchase of the indelible ink machine. Finally, this proposal will inform the president as to the internal control measures which are not being taken, and thus inadequately protecting the company from becoming a victim of fraud. These topics will covered in order to exemplify what other internal controls are needed, where LJB Company is successfully implementing internal controls, and in what manner internal controls are lacking. One of the first internal controls LJB Company needs to implement is to have a system to separate the duties of the employees, and implement smart hiring practices (i.e. the accountant should not also function as the human resources representative, consequently a convicted child molester was hired). Second is the internal control of 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 (i.e. the accountant purchases all the supplies and processed payment for these purchases, and he also receives and completes the bank reconciliations) (Harrison, Horngren & Thomas, 2013). Third, is to maintain adequate records, highlighting the importance...

Words: 992 - Pages: 4

Premium Essay

Acct504 Case Study

...LJB Company Internal Controls Evaluation and Assessment CONTENTS: 1. Introduction and Scope ……………………….Page 1 2. Results and Findings……………………………Page 2 3. Recommendations………………………………Page 3 4. Reference Citations………………………….…Page 4   LJB COMPANY - Internal Controls Evaluation and Assessment Introduction and Scope: This evaluation looks at the current internal control system at LBJ Company, assesses for compliance with requirements for Initial Public Offering (IPO) and provides recommendations for strengthening the primary components of an effective Internal Control System. Internal Control System Primary Components 1. A control environment: It is the responsibility of top management to make it clear that the organization values integrity and that unethical activity will not be tolerated. 2. Risk assessment: Companies must identify and analyze the various factors that create risk for the business and must determine how to manage these risks. 3. Control activities: To reduce the occurrence of fraud, management must design policies and procedures to address the specific risks faced by the company. 4. Information and communication: The internal control system must capture and communicate all pertinent information both down and up the organization, as well as communicate information to appropriate external parties. 5. Monitoring: Internal control systems must be monitored periodically for their adequacy. Significant deficiencies need to be......

Words: 1191 - Pages: 5

Premium Essay

Case Study 2 Acct504

...company public will demand very tight internal controls and the highest standards for your employees. I have prepared a few remarks, and suggestions which I recommend you implement before your company goes public. Internal controls comprises the enterprise of systems established in an organization to provide reasonable assurances that organizational objectives will be achieved. More specifically, internal controls objectives can be achieved based on the five following practices. 1. Ensuring the orderly and efficient conduct of business in respect of business standards and practices being in place and fully implemented. Controls means that clear guild-lines and standards are established and clearly understood by its employees. 2. Ensuring the completeness and accuracy of financial records. All financial transactions are fully and accurately recorded, assets and liabilities are correctly identified and properly valued, and that all revenues and costs are fully accounted for.  3. To prevent and detect fraudulent activity. Controls are necessary to show up any operational or financial disagreements that might be the result of theft or fraud. 4. Ensuring the timely and preparation of financial information which applies to statutory reporting and also management accounts to facilitate effective management decision-making. 5. To safeguard the assets of the business, controls are required to ensure they are properly protected from fraud,......

Words: 993 - Pages: 4

Free Essay

Case Study 2

... BCS 300: Management Information Systems Module 2: Case Study Questions Case Study: Google’s New Search for the Best and the Brightest” Page 53: 1-6 1. Google’s traditional hiring practices did not create business problems because the method that they came up with to rate people in their positions was brilliant. Google created surveys to see what people really wanted to do in life and what they would strive at the most. Using this will only create results for the company and the individual because the employee will like their job and in turn they will be happily committed to getting work done. 2. Yes, I think that Google’s quantitative approach to hiring a good solution to its employee recruiting problems because these tests are allowing them to put the employees in positions that they want to do, instead of something they know how to do, but have no interest in it, when an individual likes their position they will be way better at it, 3. The role that culture plays in Google’s hiring is very big. Google is the only one of its kind to use this method of recruitment and it is successful. They use the method of adapting to the times by making the atmosphere comfortable for the people working in it. 4. The type of system used in this case study is The Human Resources System. This system supports......

Words: 666 - Pages: 3

Free Essay

Acct504 Case Study 2

...LJB Company: Evaluation and Development of Internal Controls Accounting 504 Managerial Use and Analysis Professor Abner 8/10/2014 Evaluation of LJB Company’s current system of internal controls, with recommendations for improvements and an explanation of federal regulations required for the company to go public. Contents Introduction 2 Overview 2 Summary and Conclusion 3 Works Cited 4 Introduction The asked for appraisal of LJB Company's interior controls has been finished and our firm has likewise examined current regulations in regards to traded on an open market firms to help guarantee that your organization makes a smooth move into people in general business in the event that you choose to seek after this alternative. Traded on an open market enterprises are obliged to execute and take after the rules for inward controls and techniques for monetary reporting, put forward by the Sarbanes-Oxley Act (SOX) of 2002. This implies that upper administration and executives at LJB are in charge of guaranteeing that the controls are viable and solid, besides the organization should intermittently use outside examiners that will have the capacity to affirm the exactness of the interior controls. This data is recorded every financial year in the inside control report and will be incorporated as a feature of the yearly Exchange Act report. This demonstration serves to diminish the likelihood of corporate extortion by guaranteeing that all enterprises...

Words: 913 - Pages: 4

Premium Essay

Case Study 2

...“Literature Review” IMPACT OF AUTOMOBILE ON THE ECONOMY: Mr. Zahoor Sheikh Sarwar (CASE), Mr. Azam Ishaque, (CASE), Mr. Nadeem Ehsan, (Center For Advance Studies in Engineering), Mr. Danial Saeed Pirzada, (Center For Advanced Studies in Engineering), and Mr. Zafar Moeen Nasir, (CASE) in their report published in International Journal of Productivity and Performance Management, has Identified that automobile sector has huge economic potential and the Study identified the prevalent condition of productivity in automotive Manufacturing industry of Pakistan and indicated the possible areas for Enhancing productivity. The findings of this research have revealed that Effective utilization of role of technology can enhance the productivity of Pakistani manufacturing firms drastically. Pakistan Auto Industry Development Program (AIDP-2006), an study conducted by Ministry of Industries and Production, Government of Pakistan states that the Pakistan Auto Industry has become a leading industrial sector to steer the growth in large scale manufacturing sector. The high economic and job multiplier effect of this industry and its deep forward and backward linkages in allied industries, make the auto industry a key player in the national economy. the world which manufacture all kinds of vehicles i.e. 2/3 wheelers, motorcars, LCVs, tractors, prime-movers & trucks and buses. The total country requirements are generally met from the local production......

Words: 1365 - Pages: 6

Premium Essay

Part 2 of Case Study 3 in Acct504

...Part 2 of Case Study 3 in ACCT504 2. What are the three sections of a cash budget, and what is included in each section? The three major sections of a cash budget are cash receipts, cash disbursement, and financing. A cash receipt includes cash collections from customers; sales to customers, collecting on credit sales, interest made, etc. Cash disbursement is considered anything that is expected to be paid; administrative expenses, inventory purchases, taxes, etc. Financing is the part of the cash budget that is needed in case of a cash deficiency. If a cash budget falls short, the company can borrow money to make up for that amount. Repayment of the financing then also includes the interest that needs to be paid on that amount, (Weygandt, Kieso & Kimmel, 2002). 3. Why is a cash budget so vital to a company? A cash budget is a tool that can be used to manage a company’s cash. This budget will help a company stay focus by determining an appropriate budget, and help the company see if they can or cannot afford a new investment; or if and how much of financing may be needed. 4. What are the five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash? The five principles are: Increase the speed of collection on receivables; which means that the company will be able to use those funds quicker. Next, inventory levels should be kept low, which also keeps the cost of storage lower and prevents......

Words: 406 - Pages: 2

Premium Essay

Case Study 2

...Case Study 2 DeVry University Professor Cleary Acct. 504 28May14 Case Study 2 Table of Contents Introduction ……………………………………………………………………………………….3 Required changes ………………………………………………………………………....………3 Practices to keep …………………………………………………………………………....…….3 Practices to change ……………………………………………………………………………….4 Conclusion ………………………………………………………………………………………..5 References ………………………………………………………………………………………...6 Introduction This letter is to address some concerns that the president of LJB Company has come to the author to address. The particular areas of concern are the internal controls that are present at the company. Additional concerns include changes that may need to be made if the company goes public, best practices that should be kept, and practices that need to be altered. This letter will address the issues listed in order with a summary and conclusion at the end. Required Changes This section will cover the required changes that need to be made to conform to regulations that will need to be followed if the company decides to go public. LJB will need to conform to the Sarbanes-Oxley Act if the company decides to go public. Some key features of the act that will have to be taken to be in compliance with the act include the following; the issuance of an internal control report and have an outside auditor evaluate the soundness of the report. The auditing company may not also provide any consulting services to the company. For further information regarding......

Words: 821 - Pages: 4

Free Essay

Acct 504 Case Study 2

...Y’Lonn James Yolanda Serrano ACCT504-10563 Case Study #2 02/05/2016 Situation a. Missing Internal Controls: Monitoring control is the missing internal control weakness. This monitoring provides “eyes and ears”, so that no one person or group of persons can process a transaction completely without being seen and checked by another person or group.  This control involves understanding how companies monitors its control and how effective the monitoring is. The clerk should not be the only person who maintains the entire inventory. Segregation of duties is also missing. Segregation of duties is one of the steps that decrease the likelihood of theft. Segregation of duties prevents a breakdown in a key element of controls, such as improper segregation of duties and/or improper access to assets. Or it might result from a weak control environment. In the absence of the segregation of duties, the clerk has opportunity to steal. Problems: Can record inaccurate information since nobody is there to double check Theft Solution: Put a supervisor in place to for oversight until the cashier is adequate. Implement check and balances by preventing one person from processing transactions. Situation b. Missing Internal Controls: Adequate records, bookkeeping, and Authorization: Nicole is a part of a successful growing business, but does not book keep and provide any reports for the sales team. Problem: Not being able to accurately account for what......

Words: 406 - Pages: 2

Free Essay

Chp 2 Case Study

...CHAPTER 2 CASE STUDY Zara International: Fashion at the Speed of Light At the announcement of her engagement to Spain's Crown Prince Felipe, Letizia Ortiz Rocasolano wore a chic white trouser suit; within a few weeks, hundreds of European women sported the same look. Welcome to fast fashion, a trend that sees clothing retailers frequently purchasing small quantities of merchandise to stay on top of emerging trends. In this world of “hot today, gauche tomorrow,” no company does fast fashion better than Zara International. Shoppers in 78 countries, including Canada, have taken to Zara's knack for bringing the latest styles from sketchbook to clothing rack at lightning speed and reasonable prices. In Fast Fashion, Moments Matter Because style - savvy customers expect shorter and shorter delays from runway to store, Zara International employs a stable of more than 200 professionals to help it keep up with the latest fashions. It takes just two weeks for the company to update existing garments and get them into its stores; new pieces hit the market twice a week. Defying the recession with its cheap – and - chic Zara clothing chain, Zara's parent company Inditex posted strong sales gains. Low prices and a rapid response to fashion trends are enabling it to challenge Gap, Inc., for top ranking among global clothing vendors. The improved results highlight how Zara's formula continued to work even in the downturn. The chain specializes in lightning-quick turnarounds of the......

Words: 421 - Pages: 2

Wonder Boy - The Dragons Trap *Neue Version/DLC Wonder.Boy.The.Dragons.Trap.MULTi12-ElAmigos 923 MBAbenteuer++ 808.4 | Comodo Internet Security 5.10.228257.2253 x86-x64 | 4x autocollant sticker voiture jolly roger drapeau pirate biker jack rackam r8