Internal control has five components and it is recommended the LBJ Company to adopt the following components in order to meet the SOX Act. The five Internal control components are: Control environment – Is the foundation for all other components of internal control‚ providing discipline and structure. Control environment comprise of the integrity‚ ethical values and competence of the entity’s people. (coso) Top management of LBJ Company should make it clear that the company values integrity and
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Guidelines III. Advice to LBJ Company IV. Conclusion This document is intended to serve as an informational piece regarding steps and procedures that would need to be followed for the purposes of bringing a privately held company into regulations with the intent of becoming a publicly traded company. The intended audience for said information will include all decision makers and accounting representatives‚ including but not limited to‚ the President of LBJ‚ CEO‚ CFO‚ controller‚ treasurer
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2 – Internal Control A review of policies and procedures for LBJ Company has been conducted‚ and there is a distinct lack of internal control that must be addressed in order for the company to go public. Internal control is identified as: “the process designed to ensure reliable reporting‚ effective and efficient operations‚ and compliance with laws and regulations” (Edwards‚ 1994). Additionally‚ to attract prospective investors‚ LBJ Company must follow the guidelines identified by the Sarbanes-Oxley
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maintain an acceptable system of internal control. The board of LBJ will be responsible for warrant that the control process is effective. The companies must have external auditors verify to the adequacy of the internal controls put in place. Be aware if the company does not pass or is not found in compliance they do stand the risk of losing some investors. The Act can be deemed as valuable to the company as well and could make LBJ more value and save them time and money if redundancies are found
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they are currently using. Another thing the company is doing is using pre-numbered invoices. This will ensure no invoices are being paid twice and are paid in a timely manner within the regulations of GAAP. The company should not purchase the indelible ink machine to purchase their checks. That is an expense that can be saved‚ leaving the cash on hand to go to correcting issues within the organization. 3. Violations and Improvement Below are a list of items that should be addressed immediately
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procedures. The activities presented are the backbone in a company’s efforts to identify and address the risks a company faces‚ such as fraud. Segregation of Duties The most indispensable internal control system would be segregation of duties. With LBJ main purpose going public the company would benefit from Segregation of duties should the President correct the violated principle due to the individual responsible for the record keeping of this asset should be separated from the physical custody of
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To: President of LBJ Re: Internal Controls My Recommendation Impact of going public Public companies‚ as the result of the passing of Sarbanes Oxley Act of 2002‚ are necessary to document their controls‚ assess the documented controls and have their external auditors examine their testing of controls and note down a report about the efficiency of controls surrounding financial reporting. As a result‚ there will be supplementary work on designing‚ testing and auditing of controls if you come
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communication‚ and group monitoring should all be a part of the internal control report (Kimmel 349). From the given information‚ the internal control components of an effective internal control system are not as efficient as they can be. Because LBJ is trying to go public in the near future‚ there are some requirements that must be met in within the internal control system. It is the responsibility of the management on how important ethics are within the
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LBJ Company: Internal Control Evaluation Accounting 504: Managerial Use & Analysis Case Study 2 Written by: 8/10/13 This evaluation is being presented as an assessment of the preparedness of the LJB Company to go public at a future date. By researching current regulations regarding publicly traded firms we hope to prepare for a smooth transition into the trading market. The Sarbanes-Oxley Act of 2002 (SOX) has established the following guidelines
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References: Bernama. (2013‚ June 26). Shahidan: Tests show that ink used in ge was indelible. The Sun Daily. Retrieved from http://www.thesundaily.my/news/753841 The sun daily Anil‚ N. (2013‚ June 27). Malaysians let down by ‘indelible’ ink scandal. Retrieved from http://anilnetto.com/malaysian-politics/malaysian-elections/the-indelible-ink-scandal/ Wikipedia Ministry of Foreign Affairs‚ Malaysia (2013). Consular Information. Retrieved July 15‚ 2013
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