Internal Control Case Study. Some of the important independent components of internal control system which an organization should have are:

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Internal Control Case Study

The content of this report is based on the methods adopted by an organization to preserve its assets, increase its operation efficiency and enhance reliability of accounting records and also to ensure that the organization is in accordance with the laws and regulations of that country. In other words assuring high standard of business & ethical practices permeate those activities which surround the organisation and optimally utilising its resources.

Some of the important independent components of internal control system which an organization should have are:

  • Control operating environment
  • Risk assessment
  • Control Activities
  • Information systems & communication methods
  • Monitor performance

In LJB case we can clearly see that the organization do not have an effective internal control system. If the company is thinking to go to public in near future it has to formulate a proper internal control system. The first and the most important component of an internal control system in an organization is leadership which comes in the control operating environment. It is the firm leader’s responsibility to ensure that the organization values integrity and any unethical activity would be punished. Secondly, managing its control activities is considered to be the backbone of any organization. In order to tackle the risk such as fraud the organization should design its policies accordingly.

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Having lesser number of employees gives an advantage to LJB. The firm builds a long term relationship with its employees and which suggests loyalty and low employee retention. If the employees are less it is also easier to set new rules and implement. The decision of indelible ink machine is a great idea. Pre-numbered invoices would help the firm to record the transaction only once and will record all the transactions. This will also ensure timely recording of the transactions which will further result in accuracy and reliable accounts. The use of physical control is also very essential for the ...

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