Internal Controlo

In: Business and Management

Submitted By dawson
Words 2475
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Internal Control

LJB Company is a local distributor that’s planning to go public in the future. With the president knowing what it was going to take to go public they knew it was new regulations required. They would be required to follow the Sarbanes-Oxley Act; which stated that all public traded U. S. corporations are required to maintain an adequate system of internal control. As the President of the company it will be both your responsibility of the board of directors to make sure that the internal controls are reliable and effective. You must also hire an independent outside auditor to come in periodically to ensure the adequacy of the company’s internal control system. TO ensure that you will be set up to meet all the internal control requirements by the time LJB goes public, this report will list the requirements of internal control and state what your company is currently doing correct and that can help the company meet the internal control standards. Internal control is defines as all the related methods and measures adopted with an organization to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations. It has five primary components, a control environment, risk assessment, control activities, information and communication, and monitoring. If LJB goes public to go public in the near future there is some new internal control requirement to be aware of all basic components of the internal control environment. The control activities are the backbone of the company effort to address the risks it may face, such as fraud.
These components are broken down further into six principles. These principles are establishment of responsibilities, segregation of duties, documentation procedures, physical controls, independent internal verification and human…...

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