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ACCT 504 Case Study 2 Internal Control




Question;LJB Company, a local distributor, has asked your accounting firm to evaluatetheir system of internal controls because they are planning to go public in thefuture. The president wants to be aware of any new regulations required of hiscompany if they go public, so he met with a colleague of yours at a localrestaurant. The president of the company explained the current system of internalcontrols to your colleague. Your colleague has since been promoted to a taxposition so she has passed on the information below so you can generaterecommendations for the partner at your accounting firm to share with thepresident of LJB Company.Since LJB Company is a relatively lean organization, they have a lot of faith intheir long-term employees. They have one accountant who serves as treasurerand controller, which streamlines many of their processes. In this dual role, hepurchases all of the supplies and pays for these purchases. He also receives thechecks and completes the monthly bank reconciliation. The accountant is sobusy that the company handles petty cash a bit differently. All employees haveaccess to the petty cash in a desk drawer and are asked to only place a note ifthey use any of the cash.The accountant has recently started using pre-numbered invoices and wants tobuy an indelible ink machine to print their checks. The president is waiting to hearfrom you if this is a necessary purchase before authorizing.On payday, the checks are picked up by the accountant and left in his office forpick-up. Before he leaves for the weekend, he will move the checks into a safe inhis office.The president is still quite embarrassed because he had to fire one of hisemployees for viewing pornography on a company computer. He later found outthis individual was a convicted felon who served time for molesting children. Thecompany had a hard time getting the employee to admit it was him because thecompany does not assign individual passwords. The president expressed hisfrustration because both he and the accountant both interview and approve all ofthe new hires.Required:Based on the above information, prepare a Word document to address thefollowing.1. Inform the president of any new internal control requirements if thecompany decides to go public. (7 points)2. Advise the president of what the company is doing right (they are doingsome things well), and also recommend to the president whether or notthey should buy the indelible ink machine. When you advise the president,please be sure to reference the applicable internal-control principle thatapplies. (13 points)3. Advise the president of what the company is doing wrong (they aredefinitely doing some things poorly). Please be sure to include theinternal-control principle that is being violated along with arecommendation for improvement. (20 points)You must prepare a formal report for the partner to distribute to thepresident, so no abbreviations or short-hand answers. You also must citeyour references. At a minimum, your textbook should be cited.Below is a grading rubric for this assignment.CategoryPointsDescriptionUnderstanding10Demonstrate a strong grasp of the problem at hand.Demonstrate understanding of how the course conceptsapply to the problem.Analysis30Apply original thought to solving the business problem.Apply concepts from the course material correctly towardsolving the business problem.Execution10Write your answer clearly and succinctly using strongorganization and proper grammar. Use citations correctly.Total50A quality paper will meet or exceed all of the aboverequirements.Best PracticesThe following are best practices in preparing this paper.Cover page: Include whom you prepared the paper for, who prepared it,and the date.Table of contents: List the main ideas and sections of the paper and thepages where they are located. Illustrations should be included separately.Introduction: Use a header on your paper. This will indicate that you areintroducing the paper.The purpose of an introduction or opening is to1.introduce the subject and why the subject is important,2.preview the main ideas and the order in which they will becovered, and3.establish the tone of the document.Include in the introduction a reason for the audience to read the paper. Alsoinclude an overview of what you will cover and the importance of the material.(This should include or introduce the questions you are asked to answer in eachassignment.)Body of the report: Use a header with the name of the case study. Anexample is, "The Development of Hotel X: A World Class Resort." Proceedto break out the main ideas: State the main ideas, the major points of eachidea, and provide evidence. Show some type of division, such asseparate, labeled sections, separate groups of paragraphs, or headers.Include the information you found during your research and investigation.Summary and conclusion: Summarizing is similar to paraphrasing butpresents the gist of the material in fewer words than the original. Aneffective summary identifies the main ideas and the major support pointsfrom the body of the report, minor details are left out. Summarize thebenefits of the ideas and how they affect the subject.


Paper#38219 | Written in 18-Jul-2015

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