Fi504 Case Study 2

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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. Under this law, executives must ensure these controls are reliable and effective. As with any business, the transformation a private business to public one requires extensive planning and preparation. Therefore, as your advisor, I recommend LJB should reevaluate the cost of going public versus the benefit of being a public traded company, since LJB is a relatively small sized company in terms of its employees. If LJB decides to issue stock, it is wise to answer the following questions: (1) how many shares should be authorized for sale; (2) how will LJB issue the stock; and (3) what value can be assigned to the stock once it is issued. 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

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