Essay about Case Study 2

929 Words Oct 30th, 2014 4 Pages
June 5, 2014
Audit Report Number: LJB-505-2014

To: Patrick Krause President, LJB Company

Anthony Sahara General Counsel, LJB Company

Rebecca Patriosky Treasurer and Controller, LJB Company

From: Dilenia Baez Audit Engagement Manager, Ralph & Golberms, PLLC


As part of the engagement approved by Patrick Krause, President of LJB Company. Ralph & Golberms, PLLC evaluated the current internal control functionality of LJB Company and develop (1) synopsis strength, weakness opportunities and threats presented by the status (2) a set of recommendations concerning any regulations by LJB Company to go public.

LJB COMPANY: Internal Control Review

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(Financial Accounting, 9Th Edition, Harrison, Horngren, Thomas) 2. If LJB Company decides to go public, it must take into account the cost against the benefits of doing so. The increased standard of internal control requires a lot of funding and will probably require them to add employees in order to keep up with the more stringent demands in financial reporting among other costs.


A. Effective internal controls in place 1. Documentation Control: By using pre-numbered invoices, LJB Company is maintaining an excellent control of documentation by making sure the invoices are numbers accordingly. This enables the person to make sure that all invoices are documented immediately. Documents are the evidence that a transaction has occurred, in addition of being necessary for accurate recordkeeping. Also pre numbered invoices will allow you to know if any invoices are missing. 2. Indelible Ink Machine to print checks: I suggest for the approval of this machine, by using this procedure prints checks cannot be erased or modified. The printer will protect physical control and documentation process. Using this machine will ease the company from fraud activities and will reduce the risk of errors intentional or misrepresentation in the accounting process 3. Locking payroll checks over the

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