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Internal Controls Summary

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DEVRY UNIVERSITY |
LBJ Company – Internal Controls Summary |
CASE STUDY 2 |
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Introduction
Internal control is the integration of the activities, plans, attitudes, policies, and efforts of the employees of a department working together to provide reasonable assurance that the department will achieve its mission. Internal controls help to provide reliable data by ensuring that information is recorded in a consistent way that will allow for useful financial reports. They also help prevent fraud and loss by safeguarding assets and essential records. Internal controls promote operational efficiency by reducing unnecessary duplication of effort and guarding against misallocation of resources. The purpose of this paper is to provide LJB Company with recommendations and identify potential areas of improvement regarding their current internal controls system. This report will identify what LBJ is currently doing well within their internal controls, and what they should improve upon in order to comply with the internal control principles.
Internal Controls
If LJB Company decides to go public in the future they must comply with the Sarbanes-Oxley Act (SOX). The SOX was passed by the U.S. Congress in order to protect investors from the likelihood of fraudulent accounting activities.   The SOX mandates strict reforms to improve financial disclosures from corporations and prevent accounting fraud. Under SOX, all publicly traded U.S. corporations are required to maintain an adequate system of internal control. Corporate executives and boards of directors must ensure that these controls are reliable and effective. In addition, independent outside auditors must attest to the adequacy of the internal control system (Kimmel, 2013). Companies that fail to comply are subject to fines, and company officers can be imprisoned. SOX also created the Public Company Accounting Oversight Board (PCAOB) to establish auditing standards and regulate auditor activity...

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Internal Controls Summary. Anti Essays. Retrieved December 10, 2018, from the World Wide Web: http://parimatchstavki7.com/free-essays/Internal-Controls-Summary-506686.html