This document discusses several topics related to corporate governance and financial auditing:
1. It compares the Anglo-American and Continental European models of corporate governance and discusses how boards of directors differ between the two models.
2. It provides an overview of the Sarbanes-Oxley Act of 2002 and its purpose of improving financial reporting and protecting investors.
3. It defines the fiduciary duties of nonprofit boards, including the duty of care, loyalty, and obedience.
This document discusses several topics related to corporate governance and financial auditing:
1. It compares the Anglo-American and Continental European models of corporate governance and discusses how boards of directors differ between the two models.
2. It provides an overview of the Sarbanes-Oxley Act of 2002 and its purpose of improving financial reporting and protecting investors.
3. It defines the fiduciary duties of nonprofit boards, including the duty of care, loyalty, and obedience.
This document discusses several topics related to corporate governance and financial auditing:
1. It compares the Anglo-American and Continental European models of corporate governance and discusses how boards of directors differ between the two models.
2. It provides an overview of the Sarbanes-Oxley Act of 2002 and its purpose of improving financial reporting and protecting investors.
3. It defines the fiduciary duties of nonprofit boards, including the duty of care, loyalty, and obedience.
This document discusses several topics related to corporate governance and financial auditing:
1. It compares the Anglo-American and Continental European models of corporate governance and discusses how boards of directors differ between the two models.
2. It provides an overview of the Sarbanes-Oxley Act of 2002 and its purpose of improving financial reporting and protecting investors.
3. It defines the fiduciary duties of nonprofit boards, including the duty of care, loyalty, and obedience.
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ASSIGNMENT MANAGEMENT CONTROL SYSTEM
Kasih Karunia Ranty – 008201800067
1. Compares two corporate governance models: the Anglo-American and the Continental European model. These corporate governance models differ strongly, and the differences are mainly due to differences in the business context. The problems arising from separation of ownership from control will thus have to be solved through different mechanisms. One important mechanism is the board of directors. The board composition of 122 companies has been analyzed in a Belgian empirical study
2. The Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. The Act is designed to oversee the financial reporting landscape for finance professionals. Its purpose is to review legislative audit requirements and to protect investors by improving the accuracy and reliability of corporate disclosures.
3. Defining Fiduciary Duties
Nonprofit board members make many important decisions, such as recruiting and appointing new board directors, hiring and firing managers and other staff members, monitoring financial reports and conducting an annual audit. All of these duties fall under the duty of care, duty of loyalty or duty of obedience. Duty of careduty of care means that board directors must give the same care and concern to their board responsibilities as any prudent and ordinary person would. This means board members should be actively participating in board meetings and on committees. Duty of Obedience: Duty of obedience means that board directors must make sure that the nonprofit is abiding by all applicable laws and regulations and doesn’t engage in illegal or unauthorized activities. The duty of obedience also means that board directors must carry out the organization’s mission in accordance with the purpose they stated in getting qualified as a nonprofit organization.
4. The board of directors is the highest governing authority within the management structure at a corporation or publicly traded business. The board owes a company's shareholders the highest financial duty under American law, known as a fiduciary duty. It's the board's job to: Select, evaluate, and approve appropriate compensation for the company's chief executive officer (CEO). Evaluate the attractiveness of and pay dividends, recommend stock splits. Oversee share repurchase programs. Approve the company's financial statements, ecommend or strongly discourage acquisitions and mergers
5. • Audit committees : provide independent oversight over companies’
financial reporting processes, internal controls, and independent auditors. They enhance a board’s ability to focus intensively and relatively inexpensively (without involving the full board) on the corporation’s financial reporting-related functions. The audit committee can expect to review significant accounting and reporting issues and recent professional and regulatory pronouncements to understand the potential impact on financial statements. • Compensation committees : Compensation committees deal with issues related to the compensation and benefits provided to employees, and particularly top executives. In some companies, the compensation committee also provides oversight regarding the design anoperation of retirement plans. Compensation committees should be an authority on best practices, trends and regulations regarding executive compensation. In this capacity, they serve as advisors to the board.
6. The finance and accounting functions in a corporation are typically managed by a
person with the title of chief financial officer (CFO) or vice president finance (VP Finance). In larger firms, the finance/accounting related functions are typically divided between two roles – controller and treasurer : • The treasurer function : deals primarily with raising and managing capital The treasury function is generally highly centralized; the controllership function may be centralized, but it is often decentralized in larger corporations, as divisionalized corporations usually have controllers in most or all of their profit centers and some of their larger cost centers (such as plants) • the controller function deals primarily with financial record keeping, reporting, and control.
7. 8. Financial audit is a routine job In a financial audit, external auditors are engaged to obtain and evaluate evidence regarding assertions on financial statements about economic actions, to ascertain the degree of correspondence between those assertions and established criteria and also to communicate to the interested user whether the financial statements prepared by management are fairly presented in accordance with the generally accepted accounting principle. In financial audits, the auditor obtains the evidence on the degree of correspondence between assertions in the financial statement and GAAP and underlying accounts data. Financial audits are required by regulators such as the Nigerian stock exchange (NSE), and other governmental bodies for example the FIRS (Federal inland revenue services) uses a company’s financial statement to assess the company to tax - Compliance audit is an audit done to ascertain the preparation or compliance with the regulatory guidelines. Regulations can be imposed by government entities, international standard and best practice setting organization like ISO , particular Industry governing federations like NASSCOM. Independent accountants, security or IT consultants evaluate the strength and thoroughness of compliance preparations and then accordingly give non conformance report which needs to be closed on time for obtaining or continuing certification. There also can be monetary penalty including imprisonment, and nullification of certification to remain in business etc for noncompliance observed. - Performance audit refers to an independent examination of a program, function, operation or the management systems and procedures .This is usually applicable for governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the utilization of available resources.
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