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.
The FASB Accounting Standards Codification (FASB Codification) is the only source of authoritative GAAP apart from SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update to inform people about changes to the FASB Codification, which includes changes to non-authoritative SEC content. In relation to International Financial Reporting Standards (IFRS), after a new IFRS Standard is issued and before it becomes effective, the International Accounting Standards Board (IASB) helps stakeholders to understand the new Standard's principles very well. The activities of the board promote greater consistency in stakeholders' understanding of new Standards as the practice develops, which supports
The use of pre-numbered invoices should be continued. This practice supports the principle control activity falling under “Documentation procedures” and is a good method to ensure that all invoices are being correctly tracked and documented and that extra invoices are not being generated for fraud purposes (3). c. The purchase of an indelible ink machine to imprint check amounts is highly recommended as a further documentation control activity procedure. The use of such a machine will ensure that check amounts are correctly and clearly shown on each check and in such fashion that it would be extremely difficult to re-write or forge an amount versus the continued use of hand-written checks which carry a greater error rate and greater opportunity for fraud (4). d. Monthly bank reconciliation: This is a good practice to
Should the company be having cash flow issues, additional disclosure in the financial statements may be required. This would be the case if a ratio was in violation of a banking agreement or debt covenant and the debt could then be called at any time, financial statement users would need to be aware of this. Ethical Issues The Vancouver office has asked me to call CCC regarding the employee’s employment status with CCC and why the payment was made from Worldwide. This poses a couple of ethical issues as there is a potential conflict of interest as I would be doing work for both the audit of CCC as well as the ex-employee from CCC regarding gathering information for her personal income tax return. This also poses a confidentiality breach.
Accrual Basis versus Cash Basis Accounting Summary Any good accountant knows that every business has different financial reporting needs. In order to better understand how to accurately record financial transactions for all kinds of businesses, it is important to know the two principle types of accounting. The first is accrual basis accounting, and the second is cash basis accounting. These two methods of accounting are based on two opposing ideas on when and how transactions are recorded, and each also possesses its own advantages and disadvantages. In the accrual basis method, transactions are always recorded immediately.
Your first job will be to price this acquisition using a WACC method. Once that is done, it will be useful to also find the value of CPP with and without the acquisition. The next part concerns ascertaining the prudence of the two financing methods. This will require creation of a pro forma balance sheet, which will aid in the calculation of solvency ratios. Debt servicing will need to be examined in detail to discover if one, both, or neither of these financing decisions will force the firm into bankruptcy.
Laman Company Internal Controls System Evaluation Report Client: LJB Company Oct. 5, 2012 TABLE OF CONTENTS 1 Introduction 2 Definitions 2.1 Fraud 2.2 Internal Control 2.3 The Sarbanes-Oxley Act 3 Understanding of Internal Control 3.1 Five primary components of Internal Control Systems 3.2 Six Principles of Control Activities 4 Existing Conditions and Recommendations 4.1 Well Done Aspects 4.2 Aspects Need Improvements 5 Conclusion 1 INTRODUCTION This report is prepared in order to address the internal control problems that LJB Company is facing in their operation system. The company is planning to go public, so it is very important for the leadership to understand what qualifies a company to be a public one in completing their internal control and cash systems. The report first introduces key definitions and background information related to internal control system, and the principles the leadership needs to know. In order to go public, a company needs to fulfill new internal control requirements which are explained in the following chapter. Based on existing conditions the President provided, the report then confirms the correct things the company is performing.
3. What internal processes or systems do you recommend to prevent fraudulent practices such as those present at WorldCom? Why were these practices not detected sooner? The internal audit department should have been required to report directly to the Board or CEO, and not to the CFO. I also think that the internal audit department should have had full access to the accounting system.
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.
The main of hiring people worldwide is to diversify products and inputs. As any multinational company Microsoft had to face market problems for their products and its labour force. They had the necessity to attract customers to sell the products and they also had to retain their customers to be stable in the market. Following the same concept they had risk in losing their potential employees with high qualification. This created a complex environment in where the organization had a necessity to Attract, Retain, and Reward and motivate a special group of people with compensation given.