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D.Separation of duties
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ACCT 504 Week 5 Case Study 2 Internal Control LJB
Company
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Case Study 2 - Internal Control- Due by Sunday of week 5
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 LJB Company is a relatively lean organization, they have a lot of
faith in their long-term employees. They have one accountant who
serves as Treasurer and Controller which streamlines many of their
processes. In this dual role, he purchases all of the supplies and pays for
these purchases. He also receives the checks and completes the monthly
bank reconciliation. The accountant is so busy that the company handles
petty cash a bit differently. All employees have access to the petty cash
in a desk drawer and are asked to only place a note if they use any of the
cash.