Example 2: LJB Company's Internal Controls
Jordan Del Toro
FI504 -- Accounting
This newspaper shall concentrate on the criticalities involved in LJB's transactions and exactly how it may put into action internal handles to the organization processes while increasing the accountability of individuals involved in the вЂlean business process. ' With the creation of the Sarbanes-Oxley Act as well as repercussions to the manner in which businesses must prevent fraud (both external and internal) to not misrepresent some of its economic data to its investors вЂ“ the same goes to LJB's Company as it has plans of going public thus goes under the scrutiny of everybody (aka the investors plus the larger organization community looking for investment opportunities). Case Study two: LJB's Interior Controls
" Independent internalВ verification is especially within comparing noted transactions with existing assetsвЂ¦ Large firms often assign independent internalВ verification to internalВ auditors. Internal auditors are firm employees whom continuously measure the effectiveness in the company's internalВ control systems. They review the actions of departments and individuals to determine whether prescribed inside controls will be being adopted. They also suggest improvements as needed. In fact , most fraud is usually discovered by company through internal components such as existing internal controlsВ and internalВ audits. For instance , the fraud at WorldCom, involving vast amounts of dollars, was uncovered simply by an internalВ auditor (Kimmel, Weygandt & Kieso, 2009). вЂќ Therefore , since the authors have set by the publication titled вЂ“ Financial Accounting: Tools for people who do buiness Decision Making, it is just a good practice to acquire independent report on each of the business financial ventures since this may help any business, especially an enterprise like LJB to continue to hold a high ethical standard in its accounting obligations. " Internal control frameworks (ICF) give a basis pertaining to understanding handles in an firm and for making judgments about the effectiveness of controls. TheВ Sarbanes-Oxley Work of 2002В (SOX) requires businesses to record, on an recurring basis, the effectiveness of their inside controls in their annual filings. The Investments and Exchange Commission (SEC) recommends businesses use ICF to help achieve compliance with SOX. ICF provide a useful gizmo for administration and auditors evaluating and addressing the adequacy of controls within their organization (Cereola, S. L, & Cereola, R. M., 2011). вЂќ Therefore , the topic naturally is likely to the issue of devoid of any staff within the firm (LJB) lacking their own username and password; thus, fraudulence is easily carried out with any of the systems within LJB as entire. The company cannot continue to function this way as a result of many chances for fraud to occur. Normally in the modern economy have fresh employees system their account details, but offer each new employee personalized employee ID's from the outset with their employment. This permits the companies to see who is accessing what type of information and that increases the responsibility of the users by letting them know that all their web-browsing details should be for work but not for вЂpleasure' (if you will). Especially in the case of the client's firm (LJB) since they had an staff viewing pornography on one with their computer ports. However , without individualized a and security passwords the company will not know each time a computer will be accessed by a certain worker. If the employees did have got usernames and passwords it would be easier to track who was viewing pornography on one of LJB's pcs and take those required activities by the business (whichever the decision of the managing team might be up to this specific point). Now, as many changes are becoming considered for LJB Company, it is aware of ensure that not simply financial requirements are becoming met by the firm nevertheless also the HR concerns are staying correctly handled as...
Recommendations: Cereola, H. J., & Cereola, L. J. (2011). Breach of information at TJX: An Instructional Case Utilized to Study RUEDO and COBIT with a Concentrate on Computer Handles, Data Protection, and Privacy Legislation. American Accounting Association, 26 (3). Retrieved coming from ProQuest Organization database in October 5th, 2011.
Kimmel, P., Weygandt, J. & Kieso, S. (2009). Economic Accounting: Equipment for Business Making decisions. John Wiley & Daughters, Inc.