Luigi of Luigi’s Pizzeria is currently a small one restaurant operation with a 20-table brick and mortar building. Luigi has seen a great increase in the desire for mobile Food trucks to serve his community. As a result, he has obtained additional investor funds to grow his business and add 5 new pizza Food trucks to his business. WOW! Great Job Luigi!
His new business partners are requiring Luigi to implement Internal Controls to protect their investment. They have shown him this video:
https://youtu.be/qqK6B1cTJVU
Luigi has come to our firm to help him identify what areas need to be addressed, determine what the biggest risk areas are, and document a new internal control process to protect his business and reassure his partners.
The Committee of Sponsoring Organizations has identified 5 components of internal control, which are: (1) the control environment, (2), the organization’s risk assessment process, (3), the control activities, (4), information and communication, and (5) the organization’s monitoring activities.
You have been assigned to the first requirement: Identify the areas to be addressed and highlight the initial largest risk areas. You need to create a memo to the lead partner (your professor) about these 5 areas of internal control related to Luigi’s business. In each of the 5 categories, you must provide a minimum of 3 actions to be taken by the company and our firm in the creation of the Internal Control Process for Luigi’s Pizza Empire! Within the 3 actions, at least one needs to be designated as fulfilling a SOX accounting requirement.
