Internal Control at Ljb Company
TABLE OF CONTENTS
1.0 INTRODUCTION 2
2.0 Role of internal control 2
2.1 Management: 2
2.2 Board of Directors: 3
2.3 Auditors: 3
2.4 Staff and junior managers 4
3.0 NEW RULES OF INTERNAL CONTROL 4
4.0 THE GOOD AND THE BAD 10
5.0 RECOMMENDATIONS 12
6.0 REFERENCES 14
1.0 INTRODUCTION
Internal control is defined as a process affected by an organization 's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives. It is a means by which an organization 's resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization 's resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks)
Under SOX, all public traded U.S. corporations are required to maintain an adequate system of internal controls. Corporate executives and boards of directors must ensure that 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 that LJB being a relatively small sized company in terms of its employees should reevaluate the costs versus the benefits of being a public traded company. If LJB decides to issue stock it would be wise to answer the following questions
How many shares should be authorized for sale?
How to issue the stock?
What value should be assigned to the stock?
2.0 Role of internal control
According to the COSO Framework, everyone in an organization has responsibility for internal control to some extent. Virtually all employees produce information used in the internal control system or take other actions needed to affect control. Also, all personnel should be responsible for communicating upward problems in operations, noncompliance with the code of
1.0 INTRODUCTION 2
2.0 Role of internal control 2
2.1 Management: 2
2.2 Board of Directors: 3
2.3 Auditors: 3
2.4 Staff and junior managers 4
3.0 NEW RULES OF INTERNAL CONTROL 4
4.0 THE GOOD AND THE BAD 10
5.0 RECOMMENDATIONS 12
6.0 REFERENCES 14
1.0 INTRODUCTION
Internal control is defined as a process affected by an organization 's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives. It is a means by which an organization 's resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization 's resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks)
Under SOX, all public traded U.S. corporations are required to maintain an adequate system of internal controls. Corporate executives and boards of directors must ensure that 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 that LJB being a relatively small sized company in terms of its employees should reevaluate the costs versus the benefits of being a public traded company. If LJB decides to issue stock it would be wise to answer the following questions
How many shares should be authorized for sale?
How to issue the stock?
What value should be assigned to the stock?
2.0 Role of internal control
According to the COSO Framework, everyone in an organization has responsibility for internal control to some extent. Virtually all employees produce information used in the internal control system or take other actions needed to affect control. Also, all personnel should be responsible for communicating upward problems in operations, noncompliance with the code of
References: • http://brainmass.com/business/accounting-business-analysis-financial- reporting/428459 • http://www.scribd.com/doc/77490127/Internal-Control-Case-Study