The second step or control procedure a company should take to promote corporate compliance is a detective control. Detective controls will enable the company to detect if a possible compliance violation occurred or is at-risk for a violation occurring. The company will assign an associate or group of associates the responsibilities of taking detective control measures in regard to compliance regulations. Detective control responsibilities include reporting promptly and addressing objectively any compliance violations, making sure a prescribed observation program is in place to make certain the organization adheres to its code of ethics and compliance regulations, and formally reviewing and aligning company compliances with government regulatory compliances.
In order to maintain and increase the independence of external auditors, some activities should be undertake to avoid the overdue market competition in professional accounting industry and enhance the supervising ability of the regulators. .What follow is a detailed analysis of the association between external auditors and companies. The discussion on the importance of independence for external auditors Audit is a process to evaluate and review the accounts and financial statement objectively. We can divide it into internal auditors and external auditors. Internal auditors have a inner knowledge of business process.
Regulations designed to establish responsibility, segregation of duties, and accountability protect investors, management, and the public. The result of a financial outrage and catastrophes of WorldCom, Enron, Tyco, Hollinger, and Tyco necessitated the need for better regulation and control leading to the creation of the Sarbanes Oxley Act (SOX). Public Law 107-204 of the 107thCongress was enacted by the senate and House of Representatives to “To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.” This law is better known as the Sarbanes Oxley Act, consists of a number of sections designed to oversee and prevent securities fraud, and enhancements to white-collar crime. Thesix key principles of the SOX internal controlsaccording to Internal Control and Cash are: establishment of responsibility, segregation of duties, documentation procedures, independent verification, physical controls, and other controls. Sarbanes Oxley has changed internal controls through risk mitigation and accountability.
This part of the process includes using systems and organizations for compliance techniques. Finally, the companies will use a problem solving approach to determine which solutions to implement into the compliance effort. The companies will begin to implement its enterprise risk management system by developing an appropriate internal control and corporate governance system. In the wake of high-profile corporate scandals and subsequent regulatory legislation, reporting internal controls has become a requirement. These requirements have led to organizations viewing risk management as an area of vital importance.
Importance for Risk Management to Business Leaders Business Leaders and managers are tasked with the responsibility of ensuring due diligence is performed while making decisions for the organization. Having a formal risk management program as part of the organization’s information security program provides the leaders a proper process and diligence before making important information security related decisions. The risk analysis helps managers to decide whether to go ahead with a new security program or not, while the risk assessment would help determine if the types of controls to be that needs to be implemented (Peltier, 2010). The risk assessment also helps identify the countermeasures to mitigate the risks, or help decide if it’s best to accept the risk rather than mitigate
Internal Controls Internal controls are measures that are an essential part of the business and financial procedures and policies of a company. These controls help to enhance the accuracy of accounting records, reliable financial reporting, compliance with the applicable laws and regulations, and efficient operations by reducing the risk of unintentional mistakes, intentional mistakes, and misrepresentations (Weygandt, Kimmel, & Kieso, 2008). Internal controls also assist with safeguarding the assets of a company from employee unauthorized use, theft, and robbery. The 2002 Sarbanes-Oxley Act changed the way companies do business. This act put in place guidelines to help strengthen the weaknesses in the internal controls of companies (Weygandt, Kimmel, & Kieso, 2008).
Firstly, external auditors need inquiry the tone of the top, because it can affect the culture, ethical behaviors and management of company, and also have an influence on completing expected value and internal budget. The auditors and the company negotiated the audit objectives, including the focus of audit content. The company authorized to audit staff, through a dedicated data port on the system to do real-time monitoring. We found the problem, real-time notification of the Board of Directors. Besides, auditors should estimating the significance and likelihood of occurrence of the risks that mentioned in the last part.
This can be succeeded by encouraging ethical principles inside the financial organizations. They introduced the concept of normative ethics as a tool for managers and accountants during their decision making proces... ... middle of paper ... ...he ethical choice. Next they quote the case of Adelphia fraud. They focus only on this company to make clearer to the readers the subject of the ethical framework inside the organizations. They follow step by step every illegal activity and try to examine alternative actions, if the participants (owners and auditors) were aware of the proposed ethical framework.
Its core role with regard to Effective Risk Management is to provide objective guarantee to the board on the effectiveness of risk management. The two most important ways that internal auditing contributes to the organization are in providing objective and unprejudiced assurance that the major business risks are being managed appropriately and providing assurance that the risk management and internal control framework is operating effectively The main role of internal auditing is to help the board and its audit committee in releasing its governance responsibilities by delivering: • An unprejudiced assessment of the existing risk and internal contro... ... middle of paper ... ...ods. Debtors Separation of Duties Ensure person screening for debtors is not the same one that’s in charge of receiving/authorizing payments. This ensures that all debtors are actually paying the money and not receiving free goods/services. Safeguarding Establish a credit policy for time allowed until money is payable.
The concept explores underlying motivations for CSR reporting with cautious reference to the engagement of the companies. Engagement-based CSR efforts draw conclusions on surveys and interviews and offer valuable insights towards internal structures as well as views from reporters (Adams, 2002). In such r... ... middle of paper ... ...ng major objectives for firms and attaining ability of balanced conflicting and demands for firm stakeholders. In conclusion, theories and practices in CSR reporting are multi-faceted while systems perspectives embodied in the assumptions are acknowledged through political economy dynamics. The research in corporate social disclosure utilizes legitimacy goals and questions the viability and ethical nature of the process.