Case Study 2: Internal Control
Table of Contents
Part 1: Internal Control Requirements
Part 2: What the Company is Doing Right
Part 3: What the Company is Doing Wrong
The LBJ Company is currently making a decision to go public or not and with that The LBJ Company will also need to become knowledgeable about their internal controls within their systems, specifically in regards to Accounting and also Human Resources and how it will affect them and their employees and of course how they conduct business.
There have been some positive and negative issues arise in regards to their internal controls. However, the LBJ Company needs to be acknowledged for what they are doing…show more content… Plus if the accountant is not there for whatever reason and an employee needs their check, the manager can handle that and not violate any employment laws by not giving an employee their check in a timely manner. The President of LJB Company, has also done a good thing for wanting the employees to be aware of any new regulations required of the company if they decide to go public. It is incredibly important the President have different individuals serve as an Accountant, Treasurer and Controller which will help streamline many of their processes. This way, the Accountant will not be responsible for all financial dealings and again this will create checks and balances which are required to go public.
Part 3: Advise the President of what the company is doing wrong (they are definitely doing some things poorly). Please be sure to include the internal control principle that is being violated along with a recommendation for improvement. (20 points)
This situation for LBJ Company has shown that it is in clear violation of the internal control principle and is running significant risks by not including more oversight and checks and balances.
First of all, that they have one accountant who plays the role of both Treasurer and Controller is an area of great risk. The Controller and Treasurer are meant to play opposite roles in which they provide oversight and checks and balances to