Internal control requirements When the company decides to go public the requirements listed below will prove to be very helpful. It is the responsibility of top management to make it clear that the organization values integrity and that unethical activity will not be tolerated. This component is often referred to as the “tone at the top.” Control is most effective when only one person is responsible for a given task. There are many accounting regulations required by a public company. All accounting reports must follow the
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.
What are the specific regulations and safe working practices and procedures that apply to your work activities? Specific regulations and safe working practices are laid out in company manual along with procedures for work activities. It is important to identify all hazards and risks before work begins to avoid danger. Risk assessment identifies hazards and their risks. Method statements establish safe working systems such as permits to work etc to control the risks.
WHAT ARE INTERNAL CONTROLS AND WHY THEY ARE IMPORTANT? Tabitha Walton Jones AC 201 Accounting Principles I Professor Eddy September 7, 2011 Abstract Every business should be concerned with internal controls. This system is designated to help protect the company’s assets so that it does not suffer any unusual losses. Internal controls are key to any business’s financial and business policies. According to the Internal Audit from Kansas State University, internal controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization.
3. Documentation: It is vital that all transactions have proper documentations. Your company’s current use of pre-numbered invoices is an appropriate measure for this internal control. Additionally, the purchase of an indelible ink machine for printing checks would provide another layer of protection. The use of such a machine would alleviate the risk of employees altering checks for personal gain.
Physical Security Concepts Physical security is protection from any unwanted attackers or intrusions. Detecting and preventing from anything that can cause harm or damage the business or organization is the focus of physical security. Usually all businesses have weaknesses and vulnerabilities and physical security is there to protect them. The intent of Physical Security is to control access and prevent the interruption of operations. These goals are accomplished using tangible countermeasures ranging from fencing and lighting to electronic surveillance equipment and carefully defined policies and procedures.
It is recommended that positions for a controller, human resources, and a treasurer be created, that way the company has ethical segregation of duties. Once implemented the company will have a controller, an accountant, human resources personnel, and a treasurer; thus creating a secure system of checks and balances or independent internal verification system. There are several physical internal control issues that need to be addressed. While keeping a safe for securing checks is
Electronic Surveillance of Employees Professor Eric Baime, JD MBA Law, Ethics, and Corporate Governance October 24, 2010 Abstract Employees should expect privacy to complete personal needs. Employers are within their rights to use electronic surveillance to insure a safe and honest working environment. This paper will discuss whether it makes a difference if an employee is in an open area or in an enclosed office. Also, the report will determine the employer’s need to know whether or not an employee is being honest is a sufficient grounds for utilizing an electronic surveillance system. The extent to what an employer can engage in electronic surveillance of employees will be examined.
Table of Contents Cover Page 1 Table of Contents 2 Introduction 3 Report 3 Conclusion………………………………………………………………………………...4 Work Cited Page………………………………………………………………………….5 Introduction An assessment of system controls has been conducted for LBJ Company prior to going public. In order to detect and minimize the potential for fraud, the following control activities were audited: establishment of responsibilities, segregation of duties, documentation procedures, physical controls, independent internal verification, and human resource controls. All are important for restricting responsibility and reduce the possibility of abuse. Report After reviewing the current system of internal controls the following additional internal control requirements are recommended before going public: segregation of duties, rotation of duties, establishment of responsibilities, independent physical controls, and cash controls. Currently the following controls are in place or are being considered and should be put in use: the use of pre-numbered invoices and the purchase of an indelible ink machine to print checks.
STRATEGIES FOR EMPLOYEE THEFT PREVENTION AND DETECTION To reduce employee theft, it is essential that appropriate preventive and detective techniques are in place. According to Managing Business Risk: A Practical Guide, a report sponsored by The Institute of Internal Auditors, The American Insitute of Certified Public Accountants, and Association of Certified Fraud Examiners, prevention emphasizes policies, procedures, training, culture setting, and communication to prevent theft from occurring, while detection involves activies taken to identify theft that is occurring or has occurred (IIA, AICPA, & ACFA, 2008, p.30). Organizations that want to prevent employee fraud must plan carefully and continually monitor the effectiveness of their anti-fraud controls. To fully achieve a corporate culture that emphasizes and reinforces employee honesty, companies should develop theft prevention strategies that could be “effectively implemented while minimizing the impact of [potential] problems” (Steven 2006) . Employee Theft Prevention Employee theft prevention is a proactive approach to deter theft perpetrators.