Mid Term 504 Essay

636 Words Sep 13th, 2013 3 Pages
If the company decides to go public the company must adhere to the new regulations. According to Securities and Exchange Commissionhttp://www.sec.gov/rules/final/33-8238.htm.As directed by Section 404 of the Sarbanes-Oxley Act of 2002, we are adopting rules requiring companies subject to the reporting requirements of the Securities Exchange Act of 1934, other than registered investment companies, to include in their annual reports a report of management on the company's internal control over financial reporting. The internal control report must include: a statement of management's responsibility for establishing and maintaining adequate internal control over financial reporting for the company; management's assessment of the effectiveness …show more content…
The company should go under an audit of internal control which are new to the company but not new to the business.
2.
The one thing that I see that the company is doing right is that one person is responsible and accountable for each important task in the accounting process. The company is in compliance with the internal control of Establishment of Responsibility. There is no significant benefit of any type to the company other than a more professional appearance with the check writing machine. It is an unnecessary cost of money. The money would be better spent on improving other internal controls such as hiring a second person for the accounting process (separation of duties).
3.
The first and most important violation of internal control is that one person is both the controller and treasurer. This violates Segregation of Duties. One person should not be responsible for all parts of a transaction. This person can get away with fraud. The petty cash procedure is out of control. There are too many hands in it and that is not how you handle petty cash. Written notes are not generally great sources of documents, it should be receipts. This is a violation of Documentation procedures. Checks should not be left out over the weekend no one should be able to access the drawer. This is in violation Of Physical controls. The treasurer and accountant is too busy, this does not exist because there is only one

Related Documents