GAAP stands for Generally Accepted Accounting Principles. The common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. GAAP are imposed on companies so that investors have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements.
March 26th, 2012 To: President of LJB Company From: Erica Sylvester Topic: Discussion of Internal Controls-New Internal Controls Mandated if Company Goes Public, Current Good Practices and Suggested Improvements 1. New Internal Controls required if company decides to go public: a. If your company decides to become a publicly traded entity, then you will fall under the Sarbanes-Oxley Act (SOX) that requires for all traded U.S. corporations to maintain a system of internal controls that are ensured by executives and the board of directors to be reliable and effective. Independent and outside auditing will be required to check and attests to the adequacy and stringency of the internal control systems (1). Under SOX, your company will also be required to track your employees’ degrees and certifications to ensure that they meet the requirements of their job.
Companies and their independent accountants or auditors should report the effectiveness of the companies internal controls based on these six principles. Publicly traded companies or those planning to go public are required to maintain internal controls and ensure compliance of government regulations. Company Evaluation As it relates to internal controls, the LJB Company is meeting and or adhering to some of the regulation requirements of the Sarbanes-Oxley Act within the daily operations of the business. I have provided a list below of the current processes being used within LJB Company that are being done exceptionally well. Establishing Responsibility: It is important to designate only one individual to handle specific tasks.
The board of directors is responsible for overseeing and exercising corporate powers and certifying the company’s business affairs while managing the goals and objectives for long-term interests of the shareholders. Organizational Annual Report and SEC Filing The SEC requires publically traded companies to file annual financial reports, and these reports are open to the public. Investors are interested in these reports because it helps in determining the financial health of a company. As a means for providing guidelines, principles, and objectives for the financial markets in the United States, the Sarbanes-Oxley Act of 2002 enhances the SEC’s roles for reforming corporate accountability. This also includes establishing a private-sector regulator to oversee the auditing profession to combat accounting fraud, and enhancing financial disclosures.
Under SOX, all publicly traded U.S corporations are required to maintain an adequate system of internal control by means of developing principles of control over financial reporting as well as continually verifying that these controls are working. LJB needs to ensure that it corporate executives and boards of directors’ controls are reliable and effective. Additionally, independent outside auditors must attest
Society as a whole is responsible to conduct business ethically. Parallel to the formula that we use for inventing the laws that a society created to promote specific behaviors and actions that are appropriate to build trust and relationship, it is similar in corporations' behavior. According to Svensson & Woods "Society does have expectations of business and of its business leaders" (Svensson & Woods, 2008, p. 306). Ethical business behavior is a combination of values and normative ethics, which drive an organization. When analyzing Anglo-American and Primark for this case study.
* Mini Case (p. 45) a) Why is corporate finance important to all managers? All managers are mandated with a goal to improve the businesses bottom line. Successful corporations have two main goals they must meet to stay in business. The first goal is “identifying, creating, and delivering highly valued products and services to its customers.” (Brigham) The second goal is to generate “enough cash to compensate the investors who provided the necessary capital.” Behind every managerial action, the manager must ally every action they take with meeting the above two goals. In order to evaluate the success of those decisions, managers must be able to analyze their decisions and fully understand the impact past decisions will have on the past, present, and future health of the company.
To survive in today’s market, corporate culture is essential and must have the longevity to withstand corporate compliance because without a clear conscience, the government will shut the company down. McBride Financial Services Incorporated (MFSI) is discovering that corporate compliance is not as easy as it seems. MFSI is attempting to break into the mortgage business and is beginning a financial relationship with an investment firm called Beltway Investments. Beltway Investments wants to ensure that Hugh McBride is ready for this relationship by inspecting his business processes. McBride will need to ensure that changes are made, compliance is researched and built-in the strategic plan, and the shareholders will be satisfied with the new MFSI.
SWOT Analysis for Dunkin Donuts Name: Institution: Abstract SWOT analysis looks at the strength and weakness of the company as a distinct characteristic and weights it against the threat and opportunities advanced by the external environment. This analysis tries to explain the strategic positioning and fit of the company. The analysis also integrates the internal environment of the company and how it is managed by the company. The internal environment will include the entire factors that the company can control from within its managerial powers. The managerial powers will include all the officers who have authority to make decision competently on behalf of the company.
- Compliance Department (1,2) Why: A bank should ensure a strong compliance culture throughout its organization, where the board of directors and senior management set the right tone. The board of directors and senior management (including Head of the business and Supervisors) should set a clear risk appetite and ensure a compliance culture where financial crime is not acceptable. The Third Line of Defense helps the Bank to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. How & Who: Develop policies for periodic internal audits (5) covering: Adequacy of bank’s policies, procedures and controls identifying key risks, addressing the identified risks and complying with laws, regulations and