Xyz Company

The XYZ Company is exploring the possibility of going public and there are certain standards that must be considered. Any publicly traded company is required to have adequate Internal Controls as detailed by the government in the Sarbanes-Oxley Act. These Internal Controls must be both reliable and effective and external auditors will be required to verify the veracity of the controls. If your company does not pass the external audit of the company then the company can be subjected to fines and or prison time for the company executives. The government has established an oversight board that has created standards that give guidance on the type of Internal Controls that are necessary to pass an audit.

There are several basic control methods that all companies should follow and they are Environmental, Risk Assessment, Activities, Information and Communication, and Monitoring. These control measures will help ensure that the company meets all of the governmental standards set down in the Sarbanes-Oxley Act as well as ensure good operating values.

All companies like to have faith in their employees but even the most competent employee can make mistakes or fall to the temptation of abusing your trust. Internal Controls will help to protection your assets, accounting records and operations, and ensure you are obedient to government rules and laws.

After having reviewed your information I would like to first address the company environment and the controls around that environment. I see that you have great faith in your long term employees but what about your short term employees. You should be able to have faith in all of your employees and that starts by having an environment that all employees understand is ethical and based on trust. This starts at the top with you and begins with the tone that you set for the company. The faith that you have in your long term employees is a great start and something that your new employees should strive to acquire. By infusing the company with the importance of having control processes, employees will understand that this is an environment that fosters integrity and any unethical lapses will not be tolerated. This environment must be fostered from the top and any lapses by management will be compounded as employees believe that there are no consequences for a lapse in ethical standards. The best control is based on trust but with the ability to verify that trust.

There is risk in anything that we do these days and that is the same for a company. By asking for an evaluation you have already gone down the path to mitigate your company risks. With such a lean organization a lot of confidence has been placed in each employee and you must trust in their judgments, which leads me into control activates that will help to mitigate these risks.