Internal Controls Relating to the Bjb Company Essay
1130 Words5 Pages
All publicly trader companies in the USA are required to maintain and have an up to date system of internal controls. Since the LJB Company is wishing to become a public entity, I am glad to be able to assist in this action. First, the rules and regulations must be reviewed and compared to the company and how it can become public. To make the company attractive to buyers, investors, and other capital sources, it is crucial that the corporate organization and governance are well manifested. Corporate executives and the board of directors within a corporation must ensure that these internal controls are effective. The reliability and efficiency of the internal controls must be directed and supervised by the board of directors and corporate…show more content… One example is fraud. In order tor educe fraud, the management must implement policies and procedures regarding education in what the consequence of the employee and company will be if fraud is detected.
Due to the small number of employees in the LJB Copmany, there is an advantage over competitors. Because employees show long term commitment, there is a loyalty and employee retention. It is also easier to manage the employees and implementing new rules and regulations will be handled in an easier manner. The decision to switch to pre-numbered invoices was a great idea by the accountants and the indelible ink machine purchase was a great investment. These pre-numbered invoices are going to be a great aid in preventing transactions more than once and will be helpful in keeping track of recorded transactions. It will also help the timeliness of the accounting entries from the employees’ transactions. This will restore the reliability of the accounting records and their accuracy. The use of physical controls like this is crucial in the internal control environment. In addition, the holding of checks in a safe place is in accordance with the principles of internal physical control as well and it reflects the safeguard of assets—which in turn, improves the reliability and accuracy of the accounting records.
Because of the monthly bank reconciliation and sole purchasing of the supplies, the accountant is acting as a treasurer and