Financial accounting and Managerial use Essay Example for Free

Financial accounting and Managerial use EssayBackground LJB Company , a sm totally in all business local distributer who understands to go public in the future, the company should be in accordance with the law and whitethorn pauperism to take more stringent internal control principles. At the request of the president, an independent internal military rank of internal controls was conducted to evaluate the direction of strength and weakness.Objective The objectives of this report should evaluate the existing controls and make recommendations that volition ensure the companies summations and help get the most accurate financial information. Based on a corpse of internal checks and balances will be just in my recommendations to the president of the company, since most of the internal control systems depict for independent internal control This principle involves the review of data prep bed by employees. To get the upper limit benefit from an independent internal control C ontrol values and Integrity from the top make it earn that it is unethical activities will non be accepted, and set the tone for the companys culture .There are some(prenominal) principles of management 1. Establishment of responsibility management is most effective when a single source may be responsible for the problem, including the authorization and approval of transactions. failing LJB has only one accountant who serves as treasurer and controller , which can optimize the processes , but it creates an inherent risk . fracture handled informally . Accountant is so cross that the company handles the checkout bit differently . All employees have access to the small exchange drawer and just put a none asking if they use any of the cash. testimony* adapt the specific obligations of employees to limit access to authorized employees so that the buyer is not the same person who authorizes the remuneration without the approval of the head at least . Otherwise , a person may make payments that are made to yourself.* Use incomparable passwords per employee to protect the purchasing system to provide adequate documents and records management.* Assign petty cash custodian.2 . Segregation of duties After one employee should , without duplication of effort , provide a telephone set basis for evaluating the work of another employee. 2* posture Accountant receives the checks and completes the monthly bank reconciliation. This force , as the bank and the company maintain independent records , which may not always agree on what may be a simple mistake of either party. To maintain maximum benefits , a worker who has no other duties associated with cash should prepare a reconciliation.* Weakness The same accountant all purchases of supplies and pays for these purchases per hour is a dual role . Petty cash handled all .* Recommendation1. Divide the purchase task to exclude the temptation of possible abuse. Keeperof the petty cash fund makes payments , but th e reviews accountant to recharge .2 . Require the authorization of the buyer and payment of employees on vacation at different clocks of the year.3 . Documentation and procedures to provide evidence that the transactions and events occurred* Strength Accountant recently started using pre- numbered invoices.* Weaknesses Unclear procedures for tape drive requirements , invoices and time signatures in developing accounting documents . All employees are required only to leave a note in the box , not supply a receipt.* Recommendation* Delivery document indicates tumesce have been shipped, invoice sales means that the client has been announced. Use remittance advice (mail receipts ) , cash scan tapes, and deposit slips .* Require signature to identify the person responsible for the activity .* If possible , the user pre- numbered documents . It in like manner helps to ensure that the transaction is no recorded several times or not at all .* Require time when documents should be sent in accounting for timely accounting.* Require receipts for most, if not all operations on a small number of dollars.Note accountant wants to buy an unerasable ink machine to print their checks. I would recommend the purchase of this equipment , depending on the cost-benefit analysis . Keep snowy checks in safes with limited access willbe my first suggestion to cut spending this instant , with no additional costs. 4 . Physical control can be mechanical and electronic asset protection .* Strength Before leaving for the weekend accountant , accountant will move checks in a safe in his office .* Weakness For salaries , checks selected accountant and left in his office for pick-up . Cashier box is not locked.* Recommendation* shut storage inventory and records management and control at all times, and not just for the weekend .* Alarm to prevent tampering if appropriate cost benefit* Closed petty cash .5 . Independent internal verification includes an overview and comparison of the data to reconcile* Strength Does not work .* Weaknesses Unclear procedures requirements signatures , such as small cash transactions. Accountant is so busy that the company handles the checkout bit differently . All employees have access to the petty cash drawer and just put a note asking if they use any of the cash.* Recommendation1. Require an accountant to examine receipts and documents to verify costs to replenish funds.2 . Surprise internal audits6. Office of valet de chambre Resources* Strength Employees seem to stay with the company for a long time and seems to be loyal .* Weakness The President is still quite embarrassed because he was forced to fire one of their employees for viewing dirty word on a company computer. He later learned that this man was a convicted felon who served time for molesting children. The Company had a hard time getting the employee to admit that this is it, because the company does not assign mortal passwords. The President expressed his disappointme nt because he and an accountant and an interview and approve all new employees.* Recommendation1. Perform back ground checks and verify education credentials2 . Check references , but neer used the figures provided a reference sheet3 . Employees bonds that deal cash4 . Assign unique passwords for employeesConclusionThere are limitations of internal control , but they must provide reasonable self-confidence that assets are protected and accounting are accurate. Currently, as a small company LJB can not have a very complicated system of internal control , but must bed the reality of the law for trading companies with the public are held at a higher level of abidance . LJB Company does some things right , but there are several areas for improvement .Literature http//map.ais.ucla.edu/go/1002631Paul D. Kimmel , Jerry J. Weygandt, Donald Kieso 2010 Business Economicshttp//www.macomb.edu/About+Macomb/College+Policies/Policies/Guidelines+for+Purchasing+Activities.htmhttps//www.cms.go v/Regulations-and-Guidance//fin106c07.pdfhttp//www.brockport.edu/intcontrol/questions.html