U.S. corporations are required to maintain an adequate system of internal controls. Corporate executives and boards of directors must ensure that these controls are reliable and effective. As with any business, the transformation of going from a private to public requires some extensive planning and preparation. It isrecommended that LJB being a relatively small sized company in terms of its employeesshould re-evaluate the costs versus the benefits of being a public traded company. If LJB decides to issue stock it would be wise to answer the following questions • How many shares should be authorized for sale?
Objective of the case: The main objective of the case is to bring emphasis on auditing high risk accounts, like cash and inventory. PricewaterhouseCoopers did an adequate enough job during their audits to show they questioned and investigated Campbell’s Riskier accounts. Most Important highlights: Stockholders file a class-action lawsuit against Campbell due to questionable business practices and accounting schemes to enhance reported earnings. Included in the lawsuit was it’s independent auditors PricewaterhouseCoopers (PwC). To maintain reasonable gross profit margins Campbell executives reportedly instructed it’s accountants to record large, period-ending trade discounts of 15-20% as selling, general and administrative expenses instead of reductions of gross revenues.
To make their reports meaningful, a company reports the recorded data in a standardized way according to generally accepted accounting principles (GAAP). The remainder of this paper will illustrate examples of the income statement and balance sheet. In addition, this paper will discuss a few basic accounting principles along with a brief discussion of the difference in how equity is reported for an owner invested firm versus a not-for-profit entity. Construct Brandywine’s 2007 Income Statement In order to construct Brandywine’s 2007 income statement, one must first collect the data required for reporting. The income statement reports the success or profitability of a company’s operations over a specific period of time (The Income Statement, 2011).
Chapter 2, pp. 41-44: Problems 2-7, 2-10, 2-16, 2-20 2-7 (Objectives 2-2, 2-4, 2-5) Who is responsible for establishing auditing standards for audits of public companies? Who is responsible for establishing auditing standards for private companies? Explain. The PCAOB which was established by the Sarbanes-Oxley Act is responsible for providing oversight for auditors of public companies, establishes auditing and quality control standards for public company audits, and performs inspections of quality controls at audit firms performing those audits.
The audit report must show report that management has established and maintained internal controls for financial reporting. Certification of each annual report must be verified by the executive offers of the company, the report must show that they maintained established internal controls. The offices of the company must include in their reports evaluation of the internal controls effectiveness. Included in the reports, there must be reports of fraud that may have an effect that have any effect on the internal controls. The Sarbanes-Oxley Act contains 11 titles that describing rules and requirements for financial reporting in the United States (Wang,
Rule 404(a) specifically requires a statement of managements’ responsibility for establishing and maintaining adequate internal control over financial reporting of the company, their assessment of the effectiveness of the internal controls, and disclosure of material weaknesses. Rule 404(b) requires that the company’s external auditors attest to, and report on, management’s assessment of the effectiveness of the company’s internal control over financial reporting (McGladrey & Pullen,
Riordan Corporate Compliance Plan Liam Clifford LAW/531 June 11, 2012 Kim Peterson This memo has been prepared to provide an overview of a comprehensive Corporate Compliance Plan (the “Plan”) to ensure the Company’s compliance with its tax and reporting obligations A full copy has been included in the materials submitted to the Board of Directors for review in connection with the proposed adoption at the upcoming Meeting of the Board of Directors in Lieu of Annual Meeting. Riordan Manufacturing (the “Company”) has facilities in California, Georgia and Michigan in the United States, as well as a manufacturing facility in China. Riordan which engages in commerce domestically, nationally and internationally, must comply with a myriad
The economic considerations were substantial because not only would the decision raise the overall cost of the recapitalization, it would establish two undesirable precedents. The assets of Kohler Foundation, the charitable division of the corporation, were comprised entirely of Kohler Co. stock. If the price were to change, all short and long term projections for the foundation would need to been altered. Likewise, Kohler’s brother had recently passed away and the new value set by the court would, more than likely, affect the value of the deceased’s estate, which Kohler would then have to account for. The Kohler Company, as a manufacturer of plumbing fixtures, began when Kohler’s ancestor had decided to alter farm equipment and sell it as a bathtub.
Case Study 2 – Internal Control Report to the LJB Company Under the Sarbanes-Oxley Act (SOX), all publically traded United States corporations are required to maintain an adequate system of internal controls. Under this law, executives must ensure these controls are reliable and effective. An effective control system provides reasonable, but not absolute assurance for the safeguarding of assets, the reliability of financial information, and the compliance with laws and regulations. The content of this report is based on the methods and measures adopted within an organization to safeguard its assets, enhance the reliability of its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations. Clarke Cummings, Keller Graduate School of Management 5/31/2012 Case Study 2 – Internal Control Report to the LJB Company Under the Sarbanes-Oxley Act, all public traded United States corporations are required to maintain an adequate system of internal controls.
This Act plays a role in organizations to regulate financial practices, and corporate growth. SOA includes the requirements of periodic financial reports that are certified by an authorized officer. Financial statements consists companies’ liabilities, obligations, and transactions. If there are any changes beyond any means, a report must be announced to the public as soon as possible. The implementation of this Act has risks and benefits individuals who are involved.