Internal Controls Relating to the Bjb Company

wholly publicly trader companies in the USA are required to nurse and have an up to date agreement of internal moderates. Since the LJB Company is privation to become a public entity, I am glad to be able to assist in this action. First, the rules and regulations must be reviewed and compared to the accompany and how it piece of ass become public. To make the company attractive to buyers, investors, and other capital sources, it is pivotal that the corporate organization and governance are well manifested. Corporate executives and the get on with of directors within a corporation must ensure that these internal controls are effective.The reliability and efficiency of the internal controls must be directed and supervise by the board of directors and corporate executives (Kimmel 345). Beca mathematical function the LJB Company is a small size company in regards to the employee number, there should be a re-evaluation of the costs versus the benefits of existence a publicly traded company. It would be best to know how the company would study with stock in this case. A stock newspaper publisher demand to be made and discussed further regarding the number of shares, issuing stock, and stock value for the LJB Company.To protection the assets, enhance the reliability of the method of accounting inscribes, increase efficiency within the fiscal operations, defense the assets of the company, and ensure proper compliance with the laws and regulations, the Internal Control report is crucial to the company. A controlled environment, risk assessment, activity control, information and communication, and group monitor 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 nerve-racking to go public in the near future, there are just about requirements that must be met in within the internal contr ol system. It is the business of the instruction on how important ethics are within the organization. Secondly, the fencement should address the employees on what kind of risks are associated in regards to having unethical activity. angiotensin-converting enzyme example is skulker. In order tor educe fraud, the management must down policies and procedures regarding education in what the consequence of the employee and company will be if fraud is detected.Due to the small number of employees in the LJB Copmany, there is an advantage over competitors. Because employees prove long term commitment, there is a loyalty and employee retention. It is overly easier to manage the employees and implementing new rules and regulations will be handled in an easier manner. The decision to switch to pre-numbered invoices was a abundant idea by the accountants and the indelible ink machine get was a great investment. These pre-numbered invoices are going to be a great aid in preventing tra nsactions more than once and will be helpful in holding track of recorded transactions.It will also help the timeliness of the accounting entries from the employees transactions. This will restore the reliability of the accounting records and their accuracy. The use of forcible controls like this is crucial in the internal control environment. In addition, the holding of checks in a safe place is in accordance with the principles of internal physical control as well and it reflects the safeguard of assetswhich in turn, improves the reliability and accuracy of the accounting records.Because of the monthly bank satisfaction and sole purchasing of the supplies, the accountant is acting as a financial officer and controller at the same time it seems. This is a violation of the separatism of duties principle (Kimmel 355). Various frauds are possible when this dual role is employed. In order to deliver an effective and controlled system within the internal controls environment, the us e of physical custody needs to be separated from record keeping duties. Fraudulent activity will be detected if documentation and autarkical verification is not employed.In regards to cash receipts, there should be a designated employee such as a cashier to handle the cash. Also, proper cash written text of receiving and having custody of cash, cash picture and over the counter receipts, total deposits of receipts, register receipts, as well as bank deposit slips should be performed everyday (as frequent as possible). Lastly, there should be a limited genuine employee number to handle the company cash safes and cash storage in the bank (Kimmel 352). The internal controls of the LJB Company would benefit from authorizing employees that are designated for treasury purposes and.These individuals would only deal with checks and approve payments while keeping account for the checks with an approved invoice, as well as stamping each approved invoice that has been paid. Secondly, th ere needs to be a safe or vault that stores the blank checks and it is dependant access to only certain authorized individuals. The machine needs to be printed with indelible ink for the correct amount. Lastly, there needs to be monthly reconciliations of bank and book balances the company needs to have approved invoices of checks earlier issuing payment(s).The internal control principles are based on indebtedness of different employees. In the case that all employees have access to the diminutive cash drawer, it will be impossible to determine who may be accountable for an error if it occurred. It would be recommended that only one person is trusty for this handling. This petty cash should be held in a safe or vault and the person designated for access should report to the supervisor on a weekly basis in regards to the withdrawals therein. Lastly for the LJB Company, to ensure proper employee maneuver and ethical conduct, the hiring process is very important for the internal control issue.The valet resources department should control and monitor background checks that are thorough and confidential. The companys information and security is at risk with the employees, so do sure that the employee value integrity will be crucial in the long-run success of the company. In order to have better physical internal control and human resource control, there needs to be restricted access to computers and information therein. First and foremost, there needs to be an installed software program that blocks certain websites.Upon hiring, the employee should attain his or her own countersignature and login to have access to the computer. Software also exists that detects the websites accessed and a track record of login at particular times. Once an employee has their own login and password, they are solely responsible for the work they do on that computer. In summary, if all of the above listed suggested practices are taken into account and properly implemented, the LJB Company will thrive as a the publicly traded corporation. References Kimmel. Financial Accounting. 6. VitalSource Bookshelf. John Wiley &038 Sons.