Ljb: the Journey to Going Public
LJB Company
February 10, 20123
LJB: The Journey to Going Public
LJB’s Current Internal Controls an evaluation and recommendations
LJB Company
Table of Contents
Introduction1
Current State Assessment of LJB2
Gap Assessment3
Recommendations4 - 5
Summary and Conclusion6
Appendix7
References8
Introduction
In 2002 the Sarbanes-Oxley Act was passed which requires all publically held organizations, regardless of size, to comply with eleven titles of financial practices and corporate governances to maintain an adequate system of internal control. Of those eleven, there are five sections that address compliance and need particular consideration when becoming publically traded company, these are: Section 302, 401, 404, 409 and 802. (http://www.soxlaw.com).
Sarbanes-Oxley introduced major changes to regulations that govern publicly traded companies. SOX also established the Public Company Accounting Oversight Board (PCAOB). (Sarbanes-Oxley Act 2002 (n.d.) Retrieved from: http://www.soxlaw.com). The legislation was not passed to be cumbersome but as an attempt to regain people’s support after several financial scandals among large corporations.
There’s several reasons why a company should have proven and secure internal controls: * Safeguard Assets * Enhance accuracy and reliability of accounting records * Increase efficiency of operations * Ensure compliance with laws and regulations
Internal control consists of all the related methods and measures adopted within an organization to safeguard its assets. (Kimmel, Weygandt, Kieso, 2011) Internal control has Five Primary Components: 1. Control Environment 2. Risk Assessment 3. Control Activities 4. Information and Communication 5. Monitoring
First since LJB is currently a privately held company they are not required to follow SOX, however the future plan is to become a publically held company and therefore the evaluation and recommendations within this
February 10, 20123
LJB: The Journey to Going Public
LJB’s Current Internal Controls an evaluation and recommendations
LJB Company
Table of Contents
Introduction1
Current State Assessment of LJB2
Gap Assessment3
Recommendations4 - 5
Summary and Conclusion6
Appendix7
References8
Introduction
In 2002 the Sarbanes-Oxley Act was passed which requires all publically held organizations, regardless of size, to comply with eleven titles of financial practices and corporate governances to maintain an adequate system of internal control. Of those eleven, there are five sections that address compliance and need particular consideration when becoming publically traded company, these are: Section 302, 401, 404, 409 and 802. (http://www.soxlaw.com).
Sarbanes-Oxley introduced major changes to regulations that govern publicly traded companies. SOX also established the Public Company Accounting Oversight Board (PCAOB). (Sarbanes-Oxley Act 2002 (n.d.) Retrieved from: http://www.soxlaw.com). The legislation was not passed to be cumbersome but as an attempt to regain people’s support after several financial scandals among large corporations.
There’s several reasons why a company should have proven and secure internal controls: * Safeguard Assets * Enhance accuracy and reliability of accounting records * Increase efficiency of operations * Ensure compliance with laws and regulations
Internal control consists of all the related methods and measures adopted within an organization to safeguard its assets. (Kimmel, Weygandt, Kieso, 2011) Internal control has Five Primary Components: 1. Control Environment 2. Risk Assessment 3. Control Activities 4. Information and Communication 5. Monitoring
First since LJB is currently a privately held company they are not required to follow SOX, however the future plan is to become a publically held company and therefore the evaluation and recommendations within this
References: Kimmel, Paul D., & Weygandt, Jerry J., & Kieso, Donald E. (2011) Financial Accounting Tools For Business Decision Making 6E. Hoboken, NJ: John Wiley & Sons, Inc. Sarbanes-Oxley Act 2002 (n.d.) Retrieved from: http://www.soxlaw.com