Week 5 Case Study

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Mohammad Nai |

Devry University |

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Week 5 case study2 |

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To: LJB Company President

From: Purvi Patel, Accounting firm

Subject: Evaluation of LJB Company’s Internal Control Structures

Date: 2nd of feb.2014

Dear LJB Company President:

I really appreciate that you chose my firm to evaluate LJB’s internal controls system, and the following report will give you information of all new internal control requirements to go public, and we will highlight what you are doing right or wrong, and we will help you in the areas that require improvements.

Best Regards,

Mohammad Nai

Introduction:

After analyzing LJB’s operations, I have decided the company’s needs to make changes regarding its internal controls systems. And here I want to mention that all publically traded companies operations must comply with (SOX) accounting standards. As cited by kimmel (2011), complying with internal controls practices set forth by SOX act prevents fraud, and encourages effectiveness of the organization’s operations, and also insures that the company is following the applicable laws. The internal control standards based on SOX act includes many important things such as information, Communication and monitoring, risk assessment control activities etc.

1. New Internal Control Requirements for Going Public:

Sarbanes-Oxley Act of 2002 (SOX), enacted on July 29,2002, is a United States Federal law that imposed new rules and regulations for all US public companies.

Under this Act, all public corporations are required to maintain an adequate system of internal control. And corporation executives and directors are personally responsible for assuring that the internal controls are efficient. Independent auditors should also attest to the reliability of the said internal controls. It is also important to know that failure to follow this act would result in fines and sometimes imprisonment.

If LJB wants to go public it must made sure that...