Internal Control Ljb Company
Internal Control
Being that LJB Company is still a small company with faith in their long term employees puts LJB in an advantage over competitors. Having long term employees show and express the loyalty towards the company. There is one advantage of LJB Company being a small firm as we are approaching our initial public offering. Because of some small issues that will need to be resolved as per internal control requirements, LJB being a small firm it should be easier to bring change with implementation of rules on the organization.
Internal control can be considered the back bone of any company. This allows management to design and change different objectives and goals. By practicing internal control structures, we can detect and prevent any future frauds by protecting LJB’s resources.
Currently, LJB Company has one accountant serving as both Treasurer and Controller. With this dual role of the accountant, he is purchasing all the supplies and also pays for the supplies. He is also receiving the checks and completes the monthly back reconciliation. Because of his dual roles in the company, petty cash is accessible to any employee needing use of it. This would be a perfect example of what not to do and a way to introduce new internal control requirements to ease LJB going public. Internal control segregation would be the best method to avoid any future problem. Reason being that one single person should not be buying and paying supplies, making bank deposits and issuing checks. Under segregation duties would assign the responsibility of receiving, recording and having custody of cash to more than one person. Having different employees buying supplies and products and other employees paying for the products will fall under this control method.
Another important decision based under internal control would be store petty cash in a safer location with lock and key. This would reduce access to only certain individual and still recording receipts instead of
Being that LJB Company is still a small company with faith in their long term employees puts LJB in an advantage over competitors. Having long term employees show and express the loyalty towards the company. There is one advantage of LJB Company being a small firm as we are approaching our initial public offering. Because of some small issues that will need to be resolved as per internal control requirements, LJB being a small firm it should be easier to bring change with implementation of rules on the organization.
Internal control can be considered the back bone of any company. This allows management to design and change different objectives and goals. By practicing internal control structures, we can detect and prevent any future frauds by protecting LJB’s resources.
Currently, LJB Company has one accountant serving as both Treasurer and Controller. With this dual role of the accountant, he is purchasing all the supplies and also pays for the supplies. He is also receiving the checks and completes the monthly back reconciliation. Because of his dual roles in the company, petty cash is accessible to any employee needing use of it. This would be a perfect example of what not to do and a way to introduce new internal control requirements to ease LJB going public. Internal control segregation would be the best method to avoid any future problem. Reason being that one single person should not be buying and paying supplies, making bank deposits and issuing checks. Under segregation duties would assign the responsibility of receiving, recording and having custody of cash to more than one person. Having different employees buying supplies and products and other employees paying for the products will fall under this control method.
Another important decision based under internal control would be store petty cash in a safer location with lock and key. This would reduce access to only certain individual and still recording receipts instead of