Company Internal Control Essay

1716 Words Nov 20th, 2011 7 Pages
| LJB Company Internal Control Report Review | October 2, 2011 | [Type the document subtitle] |

The management of LJB Company is responsible for establishing and maintaining adequate internal control over financial reporting. This internal control system is designed to provide reasonable assurance to the company’s management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations.
LJB Company management assessed the effectiveness of the company’s internal control over financial reporting as of 2011. In making this assessment, it used the criteria set forth by the Committee of Sponsoring
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III. What the company is doing wrong/ related internal control principle and recommendation for improvement
Assessing the effectiveness of the LJB Company’s current internal control over financial reporting as of 2011, my firm has identified several areas of weakness. The following information will highlight areas for immediate improvement. 1. Establishment of Responsibility -Control is most effective when only one person is responsible for a given task. Establishing responsibility includes the authorization and approval of transactions
Areas of concern:
Hired one accountant but this position operates in a dual role – Treasurer and Controller.
He is authorized to purchase supplies as well as pays for the purchases.
The company does not assign individual passwords.
President and the accountant both interview and approve all of the new hires. Recommendation: LJB Company may need to budget for additional employees. Hire or promote an employee to assist with either Treasurer or Controller responsibilities. I am aware that for some smaller businesses these duties tend to overlap but as LJB Company plans to go public in the future intake and expenditures will increase rapidly. Incorporating now at this level will provide for a smoother transition as the company grows. A company's treasurer often serves as the CFO's right-hand person, supervising the day-to-day financial, cash-flow, accounting and budgetary issues of a

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