Case Study 2- Internal Controls

The auditor must assess the transactions for how much of a risk factor is involved. When reviewing these transactions, auditor must be able to review the internal controls of the company’s accounting personnel. The segregation of duties is associated with the safeguarding of an organization 's assets and the topic known as internal control. An example of the segregation of duties would be a company 's requirement that the bank statement for its checking

The control of cash at Sands is further subdivided into accountability, standard operating procedures during filling and security at the countroom. Firstly, individuals are held accountable for the cash charged out to them and large shortages were grounds for dismissal. Secondly, formal procedures have been put in place for the transfer of chips. These procedures include filling the opener

a majority of large banks require auditors to use electronic cash confirmation requests and, as a

1. To have a strong internal control system, a business must have good administrative controls. Administrative controls include: A. B. C. D. the reconciliation of the bank statement. the accuracy of the recording procedures. assessing compliance with company policies. maintenance of accurate inventory records.

19. Receipts must be written for each amount received but they may be retained in the receipt book unless the payment is made in cash or the payer requests the receipt be given to them

The person handling cash collections may misappropriate cash and not record the cash sale in accounting records.

2. Train every staff member who handles the cash, how to use the register correctly.

Sarbanes-Oxley Act of 2002 (SOX), enacted on July 29,2002, is a United States Federal law that imposed new rules and regulations for all US public companies.

(TCO 5) Internal Controls are required to safeguard assets and to ensure ethical business practices. (1) Identify and explain the reason for any two of the seven internal control procedures (10 points) and (2) provide examples of how your two selected internal control procedures will meet the goal of safeguarding assets and promoting ethical business practices. (15 points) (Points : 25)

One control activity in LJB that needs to be addressed is the establishment of responsibility. According to Kimmel (2011), “Control is most effective when only one person is responsible for a given task” (p. 338). Petty cash responsibility needs to be assigned to one custodian to be most effective, and that employee should keep it under lock and key as well as keep a detailed journal of use; this practice also goes along with physical control activities. Each transaction of petty cash needs to be documented on pre-numbered receipts, as well as signed by the custodian and the person receiving the payment. Doing so will allow audits to verify the amount in the account and the payments and be able to track if there is money missing at any given time. Another area that needs to establish responsibility is implementing personal passwords to access the company’s network. Using unique passwords will help identify a fraud or company violation should one occur. Using unique passwords also allows only those employees who are authorized and/or qualified to carry out specific tasks.

Open and close cash registers, performing tasks such as counting money, separating charge slips, coupons, and vouchers, balancing

There are several procedures that should be considered when implementing internal controls for your business. There should be a segregation of duties between different individuals to lessen the threat of

This paper shall focus on the criticalities involved in LJB’s transactions and how it may implement internal controls to the business processes while increasing the accountability of individuals involved in its ‘lean business process.’ With the advent of the Sarbanes-Oxley Act and its repercussions to the manner in which businesses must prevent fraud (both external and internal) to not misrepresent any of its financial data to its investors – the same applies to LJB’s Company since it has plans of going public and hence goes under the scrutiny of everyone (aka the investors and the larger business community looking for investment

accounts to obtain cash money or check available funds, etc. ATMs are available in banks and in facilities

thus minimizing the amount of currency that the Company has on hand at any point in time during the week. Additionally, the use of the bank on the daily basis facilitates the control of cash because it creates a double record of all bank transactions - one by the Company and one by the bank. Also we recommend that all receipts be deposited in the