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Case Study 2—Internal Control

924 words - 4 pages

Due by Sunday of Week 5, 11:59 p.m., mountain time
LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The president wants to be aware of any new regulations required of his company if they go public, so he met with a colleague of yours at a local restaurant. The president of the company explained the current system of internal controls to your colleague. Your colleague has since been promoted to a tax position so she has passed on the information below so you can generate recommendations for the partner at your accounting firm to share with the president of LJB Company.
Since ...view middle of the document...

The company had a hard time getting the employee to admit it was him because the company does not assign individual passwords. The president expressed his frustration because both he and the accountant both interview and approve all of the new hires.
Required:
Based on the above information, prepare a Word document to address the following.
1. Inform the president of any new internal control requirements if the company decides to go public. (7 points)

2. Advise the president of what the company is doing right (they are doing some things well), and also recommend to the president whether or not they should buy the indelible ink machine. When you advise the president, please be sure to reference the applicable internal-control principle that applies. (13 points)

3. Advise the president of what the company is doing wrong (they are definitely doing some things poorly). Please be sure to include the internal-control principle that is being violated along with a recommendation for improvement. (20 points)

You must prepare a formal report for the partner to distribute to the president, so no abbreviations or short-hand answers. You also must cite your references. At a minimum, your textbook should be cited.
Below is a grading rubric for this assignment.
Category Points Description
Understanding 10 Demonstrate a strong grasp of the problem at hand. Demonstrate understanding of how the course concepts apply to the problem.
Analysis 30 Apply original thought to solving the business problem. Apply concepts from the course material correctly toward solving the business problem.
Execution 10 Write your answer clearly and succinctly using strong organization and proper grammar. Use citations correctly.
Total 50 A quality paper will meet or...

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