Internal Control at Ljb Company

4033 Words17 Pages
TABLE OF CONTENTS
1.0 INTRODUCTION 2
2.0 Role of internal control 2
2.1 Management: 2
2.2 Board of Directors: 3
2.3 Auditors: 3
2.4 Staff and junior managers 4
3.0 NEW RULES OF INTERNAL CONTROL 4
4.0 THE GOOD AND THE BAD 10
5.0 RECOMMENDATIONS 12
6.0 REFERENCES 14

1.0 INTRODUCTION
Internal control is defined as a process affected by an organization 's structure, work and authority flows, people and management information systems, designed to help the organization accomplish specific goals or objectives. It is a means by which an organization 's resources are directed, monitored, and measured. It plays an important role in preventing and detecting fraud and protecting the organization 's
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They assess whether the controls are properly designed, implemented and working effectively, and make recommendations on how to improve internal control. They may also review Information technology controls, which relate to the IT systems of the organization. There are laws and regulations on internal control related to financial reporting in a number of jurisdictions. In the U.S. these regulations are specifically established by Sections 404 and 302 of the Sarbanes-Oxley Act. Guidance on auditing these controls is specified in PCAOB Auditing Standard No. 5 and SEC guidance, further discussed in SOX 404 top-down risk assessment. To provide reasonable assurance that internal controls involved in the financial reporting process are effective, they are tested by the external auditor (the organization 's public accountants), who are required to opine on the internal controls of the company and the reliability of its financial reporting. 2.4 Staff and junior managers May be involved in evaluating the controls within their own organizational unit using a control self-assessment.

3.0 NEW RULES OF INTERNAL CONTROL
Under the new rules, CEOs and CFOs will, in addition to the existing requirements, be required to make up to five additional certifications:

3.1. CEOs and CFOs must certify that they have evaluated internal control
CEOs and CFOs will be required to certify that they have

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