Case Study 2

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Running head: CASE STUDY 2 Case Study 2 Dear Sir or Madam: As I understand you wish to take your company, LJB a local distributor, public. It is necessary that your internal control system is inline with any regulations to avoid any mishaps along the way. In order to correctly follow the laws and regulation of internal control it is essential to strictly follow the listed general principles of internal control. (1) Establishment of Responsibility: An essential principle of internal control is to assign responsibility to specific employees. Control is most effective when only one person is responsible for a given task. (2) Segregation of Duties and Segregation of Record Keeping: Different individuals should be responsible for related activities. The responsibility for record keeping for an asset should be separate from the physical custody of that asset. (3) Documentation of Procedures: Companies should establish procedures for documents. All transactions should have documentation; all transactions should be accounted for. (4) Physical Controls: Use of physical controls is essential. Physical controls relate to the safeguarding of assets and enhance the accuracy and reliability of the accounting records To begin I would like to address what your company is currently doing well at. It is great to see that you value and put faith into your long-term employees, this will keep them loyal to your company in most aspects. Using notes for your petty cash is a basic and good attempt at keeping records of your petty cash transactions. Also the use of your numbered invoices is a good system. Locking away your checks is very good to safe guard against fraud, stolen checks. Your duel interview approach is also very good, in order to get more than one opinion on the potential employee. The idea of purchasing an ink

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