FI 504 Case Study 2 Internal Control

FI 504 Case Study 2 Internal Control -...

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Issue Date: November 26, 2011 Audit Report Number: 2011-LJB-1126 To:  William Johnson Sinacore President, LJB Company Gretchen Breaux General Counsel, LJB Company Jonathan Kirk Turner Treasurer and Controller, LJB Company From: [Insert Student Name] Audit Engagement Manager, Turner-Bernard-Grisham, PLLC. HIGHLIGHTS Introduction: What We Evaluated and Why As part of the engagement approved by William Johnson Sinacore, President of LJB  Company,   Turner-Bernard-Grisham,   PLLC   evaluated   the   current   internal   control  functionality of LJB Company and developed (1) a synopsis of strengths, weaknesses,  opportunities and threats presented by the status quo and (2) a set of recommendations  concerning any new regulations required of LJB Company to go public. Executive Summary: What We Found The management of LJB Company needs specific direction on the requirements of a  privately held company making the transition to being a publicly traded entity. As we  have been asked to specifically address internal control requirements, our guidance  points, in this report, are limited to (1) internal controls, (2) the audit committee, (3) the  board of directors, and (4) a code of ethics. Turner-Bernard-Grisham, PLLC believes that  these topics provide a sufficiently informative basis for a basic understanding of the  requirements expected of a publicly traded company
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Issue Date: November 26, 2011 Audit Report Number: 2011-LJB-1126 The management of LJB Company has demonstrated strengths and opportunities related  to   (1)   corporate   culture   and   employee  loyalty   (2)   the   presence   of   a   pre-numbered  invoicing system and (3) a lean organizational structure conducive to a smooth transition  to an initial public offering. Management has also expressed in interest in obtained  guidance on whether the company should purchase an indelible ink machine for printing  checks. The   management   of   LJB   Company   has   also   demonstrated   weaknesses   and   threats  presented by the present nature in which the day to day operations of the firm are  handled, including (1) a lack of segregation of duties, (2) insufficient cash controls, (3)  inadequate payroll controls, (4) unsatisfactory information technology controls, and (5)  scarce human resource controls. Part 1: Internal Control Requirements for a Publicly Traded Company Section 404 of the Sarbanes-Oxley Act of 2002 (hereafter referred to as Sarbanes-Oxley)  requires that the senior management of a registered publicly traded company, on a U.S.  stock   exchange,   provide   quarterly   and   annual  certifications   with   the  Securities   and 
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This note was uploaded on 03/01/2012 for the course ACCOUTNING 550 taught by Professor Abner during the Spring '11 term at DeVry Houston.

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FI 504 Case Study 2 Internal Control -...

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