Audit Committee The Audit Committee is comprised of the following five members from the Board; F. Duane Ackerman, Ari Bousbib, J. Frank Brown, Karen L. Katen, and Mark Vadon. This group is tasked with assisting the Board with the oversight of The Home Depot’s financial statements, ensuring that they are in compliance with legal and regulatory requirements. They also review and monitor the Company’s Compliance program, making changes when appropriate to ensure that the Company remains compliant. This committee must be comprised of three or more independent directors from the Board and they cannot receive any compensation other than directors’ fees from Home Depot. A requirement for this committee is to have a basic understanding of finance and accounting principles and practices. At least one member must be an “audit committee financial expert.” Mr. Brown acts as the audit committee financial expert. The members of this committee all have knowledge in basic accounting and finance principles and also bring in a variety of knowledge in different areas. Leadership Development & Compensation Committee The Leadership Development and Compensation Committee of the Board of Directors are responsible for helping with the development, attraction, and retention of The Home Depot’s leadership. They are also responsible for establishing the Company’s compensation and benefit programs. Some of their goals are as follows: 1. To establish the compensation policies and strategy of the Company. 2. To review compensation policies and ensure that the compensation of the Board of Directors, officers and associates allows for the Company to attract and retain high-quality leadership. 3. To establish policies related to human resources and emp... ... middle of paper ... ...p=irol-govCommittee&Committee=8273 Our company. (2013). Retrieved from https://corporate.homedepot.com/OurCompany/Pages/default.aspx Our leadership. (2013). Retrieved from https://corporate.homedepot.com/OurCompany/Leadership/Pages/default.aspx The home depot values. (2013). Retrieved from https://corporate.homedepot.com/OurCompany/Values/Pages/default.aspx Shivdasani, A., & Zenner, M. (2004). Best practices in corporate governance: What two decades of research reveals. Journal of applied corporate finance, 16(2/3), 29-41. U.S. Securities and Exchange Commission, (1999). Nyse chair richard grasso, nasd chair frank zarb, and blue ribbon panel co-chairs ira millstein and john whitehead announce "ten point plan" to improve oversight of financial reporting process(Press release 99-14). Retrieved from website: http://www.sec.gov/news/press/pressarchive/1999/99-14.txt
For this analysis we have chosen Home Depot Incorporated a home improvement retailer. It primary clients are professional “professional remodelers, general contractors, repairmen, small business owners, and tradesmen” (Yahoo Finance, 2015). In addition Home Depot sub contracts installations to third parties (Yahoo Finance, 2015). Home Depot has 2,270 stores in the US and international stores located in Mexico and Canada (Yahoo Finance 2015).
The audit committee a part of the board of directors plays an important role in preventing fraud. They are directly responsible for overseeing the work of any public accounting firm, such as PwC, employed by the company. They also must preapprove all audit services provided by the auditors.
Ernst & Young performed an audit of the consolidated balance sheets and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ending January 31, 2006 for the Wal-Mart Stores, Inc. and January 28, 2006 for the Target Corporation. The responsibility of Ernst & Young is to express an opinion on the financial statements given by Wal-Mart and Target, holding both corporations responsible that the statements being audited are accurate and true. The audits have to be in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB), which require that the audit must have sufficient evidence that the financial statements do not contain any false material.
Sarbanes-Oxley consisted of 11 different titles or sections. Title I is Public Company Accounting Oversight Board. It created a five member panel known as the Public Company Accounting Oversight Board, overseen and appointed by the Securities and Exchange Commission (Sarbanes-Oxley). The Board is to consist of two CPAs and three people that are not CPAs, but the chairman must be a CPA. The Board is to provide oversight of auditing of public companies while establishing auditing, quality control, independence, ethical standards (Arens 32-33). Public accounting firms that work on audits must register with the Board and pay a fee. Title I also included new auditing rules. Auditors must now retain paper work for seven years, have a second partner review and approval of audit reports, evaluate whether internal controls accurately show transactions as well as sales of assets, and describe any weaknesses or noncompliant internal controls. Public accounting firms that issue auditing reports for more than 100 companies are to be inspected every year. Accounting firms that issue audit reports for less than 100 companies must be inspected very three years. The Board can discipline or sanction accounting firms for what it deems to be negligent conduct (Conference of State Bankers Online).
Engagement is also an important part for the employees. The company provides information of the board meetings to all employees. This enhances the employees’ feelings of being well-informed and engaged. The employees even can challenge the current unit wage for manufactured parts. This is an open discussion, so we can see that employees are treated as if they were partners.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
The end of 2001 and the start of 2002 saw the end of a period of magnified share prices and booming businesses. All speculations of misrepresentation came to light and those firms which once seem unconquerable were now filing for bankruptcy. Within this essay, I shall discuss the corporate governance mechanisms and failures which led to the Enron scandal resulting in global corporate governance reforms being encouraged.
The oversight responsibilities of the board, the CAE lacking of expertise or broad understanding of financial controls and responsibilities, and the understaffed internal audit functions lacking of independence and direct access to the board of directors contributed to the absence of internal controls. To begin with, the board should be retrained to achieve financial literacy to review financial reporting. Other than attending formal meetings, the board of directors should be more involved with the management. For the Audit Committee, the two members who were recruited as acquaintances to Brennahan need be replaced with experts who are more sufficiently knowledgeable about accounting rules beyond merely “financially literate”. Furthermore, the internal audit functions need to expand with different expertise commensurate with the expanded activities of the organization, testing financial reporting rather than internal controls from an operational perspective. The CAE should be more independent and proactive to execute audit plans, instead of following orders from the CFO, and initiate a direct and efficient communication between internal audit and audit
Norwani, Norlia Mat, Mohamad, Zam Zuriyati, and Ibrahim Tamby Chek. (2011). Corporate Governance Failure and its Impact on Financial Reporting Within Selected Companies. International Journal of Business and Social Science. Vol. 2(21): pp205-213.
Lazonick, W., & O'Sullivan, M. (2000). Maximizing shareholder value: a new ideology for corporate governance. Economy and Society, 29(1), 13-35. Retrieved from http://www.uml.edu/centers/cic/Research/Lazonick_Research/Older_Research/Business_Institutions/maximizing shareholder value.pdf
It is the responsibility of the TMT to support the CEO and the DMD in:
Freeman, E. R., & Reed, D. L. 1987. Stockholders and Stakeholders: A New Perspective on Corporate Governance. California Management Review, 25(3). P.p 88-106.
The Board of Directors believes that the primary responsibility of the Directors is to provide effective governance over Halliburton's affairs for the benefit of its stockholders. Responsibilities responsibility includes: reviewing succession plans and management development programs for members of executive management; reviewing succession plans and management development programs for members of executive management; reviewing and approving periodically long-term strategic and business plans and monitoring corporate performance against such plans; adopting policies of corporate conduct, including compliance with applicable laws and regulations and maintenance of accounting, financial, disclosure and other controls, and reviewing the adequacy of compliance systems and controls; evaluating annually the overall effectiveness of the Board; and reviewing matters of corporate governance
Organization for Economic Co-operation and Development. Improving Business Behavior: Why we need Corporate Governance. Oct. 2004. OECD.
...eve efficient resource allocation. Failure to achieve appropriate and efficient corporate governance could result in sub-optimal allocation of resources, abuses and theft by management, expropriation of outside shareholders and creditors, financial distress and even bankruptcy. While evaluating the role of corporate governance, it is imperative to also consider the levels of development of market institutions and other legal infrastructure including laws and enforcement that provide good standard for investor protection as well as ownership structures.