Acct 504 Internal Control Case Study
Case Study 2-Internal Controls
2014
ACCT 504
Table of Contents
I) Introduction
II) Internal Control Requirements-Sarbanes/Oxley Act
III) Internal Controls-Strengths
IV) Internal Controls-Opportunities for Improvement
Introduction
It has come to the attention of the president of LJB Company that an evaluation is needed to determine the reliability and level of compliance of the company’s internal controls. It is imperative if the company is going public that it follow the regulations set forth by governing bodies. The punishment for violation of these regulations can be up to 20 years in prison.
The Sarbanes-Oxley Act of 2002 helps …show more content…
2) No Altering of Financial Documents- If anyone falsifies or alters financial documents they are subject to criminal penalties that includes up to 20 year in prison.
3) Must Disclose Periodic Reports- Financial statements are required to be accurate as any items off-balance could be used in a fraudulent manner.
4) Data in a timely manner- Financial data must be presented within a reasonable timely manner. The information must be written in a way that any investor could make an educated decision about investing.
5) Types of disclosure controls- Each company or organization must have policies and procedures set forth that explains guidelines that will ensure proper financial disclosure.
Internal Controls-Strengths
The LJB Company does show some strengths in their internal controls including:
1) Using pre-numbered invoices- This allows for the company to account for all purchases and aide in making sure all purchases are recorded properly. This also enables the company to track any fraudulent cash disbursement in the event that invoices are
2014
ACCT 504
Table of Contents
I) Introduction
II) Internal Control Requirements-Sarbanes/Oxley Act
III) Internal Controls-Strengths
IV) Internal Controls-Opportunities for Improvement
Introduction
It has come to the attention of the president of LJB Company that an evaluation is needed to determine the reliability and level of compliance of the company’s internal controls. It is imperative if the company is going public that it follow the regulations set forth by governing bodies. The punishment for violation of these regulations can be up to 20 years in prison.
The Sarbanes-Oxley Act of 2002 helps …show more content…
2) No Altering of Financial Documents- If anyone falsifies or alters financial documents they are subject to criminal penalties that includes up to 20 year in prison.
3) Must Disclose Periodic Reports- Financial statements are required to be accurate as any items off-balance could be used in a fraudulent manner.
4) Data in a timely manner- Financial data must be presented within a reasonable timely manner. The information must be written in a way that any investor could make an educated decision about investing.
5) Types of disclosure controls- Each company or organization must have policies and procedures set forth that explains guidelines that will ensure proper financial disclosure.
Internal Controls-Strengths
The LJB Company does show some strengths in their internal controls including:
1) Using pre-numbered invoices- This allows for the company to account for all purchases and aide in making sure all purchases are recorded properly. This also enables the company to track any fraudulent cash disbursement in the event that invoices are