Company Internal Control

Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting 12.1 EyeMax Corporation . . Evaluation of Audit Differences

According to the Sarbanes-Oxley Section 404 Act, it is the responsibility of the management to establish and maintain internal controls required for financial reporting. The company’s latest year assessment of

What is in place: All employees have access to the petty cash drawer in a desk drawer and whenever they use any cash, they are only asked to leave a note.

The most important aspect in the financial statement is to follow and regulate the internal control system of the organization. This is the most important point in this act as it detects that the internal control system of the corporations is sound or not. It wants to report about the internal control system of the organization so that the actual picture of the organization

First, I would like to thank you for hiring my accounting firm to evaluate LJB’s internal controls system. This report will inform you of any new internal control requirements required for LJB to go public, advise you of what the company is doing right, recommend that LJB purchase an indelible ink machine, and advise you what areas the company can improve.

However, one person acting as accountant, treasurer and controller places an imbalanced access to the companies invoice process, ordering process, check cashing process, and he alone decides what of these activities gets recorded in the Company books. We recommend that two other employees be assigned the respective Treasurer and Controller duties.

Internal Controls are to be an integral part of any organization's financial and business policies and procedures. Internal controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization. Internal controls are simply good business practices (Strauss, 2003). And, since internal controls can have many more meanings in the world of accounting, the more we understand what were dealing with, the better we can analyze internal

Errors in segregation of duties are prevalent as well. The current tasks for the Finance Coordinator position leave Dentistar open to internal control nightmares. This position is given responsibility to consolidate information and calculate amounts for manual disbursements, prepare checks, maintain regional accounting files, collect past due accounts receivable, organize financial data for audit, and assist with human resources. Beyond that he is indirectly, through severe weaknesses in internal control, given the ability to authorize refunds, issue payments for operating expenditures and affect the general ledger. These duties and implied responsibilities effectively give him custody, authority, recording, and review powers, which is a gross disregard for internal control. Moreover, all personnel can create operating expenditures instead of one or a small number of people, so auditors aren’t able to trace expenses to individuals.

Manages human resources operations by recruiting, selecting, orienting, training, coaching, counseling, and disciplining staff; planning, monitoring, appraising, and reviewing

The final responsibility for the integrity of an SEC registrant’s internal controls lies on the management team. U.S. companies need to refer to a comprehensive framework of internal control when assessing the quality of financial reporting to determine that financial statements are being presented under General Accepted Accounting Principles, GAAP. The widely used framework is referred as COSO, Committee of Sponsoring Organizations of the Treadway Commission, sponsored by the following organizations American Accounting Association, the American Institute of CPA’s, Financial Executives International, the Institute of Internal Auditors, and the Institute of Management Accountants. COSO’s defines internal control as:

Besides a password-protected system, WorldCom needs to create a program that tracks an employee’s computer activities as a preventive fraud measure especially if accessed over

Internal controls are can be set up in several different ways based on several basic principles. One very important principle is to establish responsibility. It is important to clearly identify who is in charge and who is accountable for certain tasks. Without accountability, individuals will simply “pass the buck” and avoid taking responsibility whenever something bad happens.

In order to identify the causes of management accounting abuses at the transaction level, the SOX requires public companies to annually document and test internal controls to ensure accurate financial reporting. The auditor is required to identify, assert, and form an independent opinion on the effectiveness of the control that has been put in place. Both management’s assessment and the auditor’s judgments are then disclosed.

If the auditors conclude that the internal control over financial reporting is not maintained effectively by management, auditors should express an unqualified opinion on management’s assessment of internal control over financial reporting. On the other hand, an adverse opinion should be issued on the effectiveness of the company’s internal control over financial reporting.

Section 404 requires public companies to establish internal controls and report annually on their effectiveness over financial reporting. The CFO and CEO are held personally responsible for the internal controls via the requirement to sign a statement certifying the adequacy of the internal control system (Moffett and Grant, 2011, p. 3). Additionally, the company’s independent auditor must issue an attestation regarding management’s assessment of the internal structure as part of the company’s annual report (Bloch, 2003, p. 68).