Devry Acct 504 Week 5 Case Study 2

DEVRY 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.
The accountant has recently started using pre-numbered invoices and wants to buy
an indelible ink machine to print their checks. The President is waiting to hear from
you if this is a necessary purchase before authorizing.
On payday, the checks are picked up by the accountant and left in his office for pickup. Before he leaves for the weekend, he will move the checks into a safe in his office.
The President is still quite...