Case Study 2
The purpose of the this report is to inform the President of new internal control requirements if the company decides to go public, advise the President of the things that the company is doing well and also recommend to the President whether or not they should buy the indelible ink machine. Finally, advise the President of what the company is doing wrong.
New Internal Control Requirements
Per LJB company’s report there appeared to be few internal control irregularities which could affect the company’s performance and overall the company existence. Whether the company decides , to go public , first the company must comply with Sarbanes-Oxley Act of 2002(SOX).
SOX require that all publicly traded companies must have in place a trustworthy system of internal control. In accordance to SOX act, all the company executives and board of directors must assure that the internal control is dependable and effective. In addition, to assure the reliability of the company’s financial statements the president of the company must sign the financial statements. Finally, to attest the adequacy of the internal control system an independent outside audit must be performed (Kimmel, Weygandt, & Kieso, 2009).
In addition, to the SOX act internal control and financial statement should be audited by an independent auditor. The auditor’s objective auditor's is to express an opinion on the financial statements. The reason the audit report is to affirm if the financial statements are "presented fairly" in accordance with Generally Accepted Accounting Principle (Becker Educational Development, 2009). Therefore, to ensure compliance with SOX, Public Company Accounting Oversight Board (PCAOB), General Accepted Accounting Principles (GAAP), and other laws regulations the company should have in place a reliable internal control. Internal control responsibilities are to safeguard the assets, improve the consistency and...