Internal Control Essay

451 Words2 Pages
To: The President of LJB Company From: tt Subject: Recommendation for the internal control processing First of all, LJB Company is a local distributor will plan to go public in the future. The regulations require of LJB Company for going the public as following the regulations .The newly public company must comply with the Sarbanes-Oxley Act of 2002,Sox section 404(a) requires an annual assessment of the issuer’s internal control over financial reporting(ICFR) while section 404(b) requires an attestation report of the issuer’s independent auditors on management’s assessment. Moreover, in its annual report, the company must report on internal controls over its financial reporting. Four key elements must be included in this report. 1. Statement of responsibility by company management the (CEO and CFO) for establishing and maintaining an adequate internal control structure and procedures for financial reporting. 2. Statement identifying the framework used by management to evaluate the effectiveness of the company’s internal control over financial reporting. 3. Management’s assessment of the effectiveness of the internal control over financial reporting. 4. Attestation by the company’s external auditor and management’s assessment of the effectiveness of the company’s internal controls and procedures for financial reporting. Second, the LJB Company is a relatively lean organization; The Company has only one accountant who serves as Treasurer and controller with streamlines many of their processes. It’s doing wrong for the internal control as following “The one of principle internal control, segregation of record-keeping from physical custody. The accountant should have neither physical custody of the asset nor access to it. The separation of accounting responsibility from the custody of assets is especially important for cash and inventories because

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