Chapters 3-4 Flashcards
definition of corporate governance
the internal systems or means by which companies are directed and controlled
the 6 principles of corporate governance
ensuring the basis for an effective corporate governance framework
the rights of shareholders and key ownership functions
equitable treatment of shareholders
the role of stakeholders in corporate governance
disclosure and transparency
responsbility of the board
definition of audit committee
a sub-committee of the board of directors, usually containing a number of independent non-executive directors.
3 roles of an audit committee
monitor financial statements
review internal controls and risk management systems
monitor and review effectiveness of internal audit department
advantages of audit committee
increased confidence in financial reports
allows executive directors to devote their attention to management
disadvantages of audit committee
could be difficult to select people with necessary competence
could dissuade auditors from raising matters of judgement
definition of internal audit function
a department that performs assurance and consulting activities designed to evaluate and improve the effectiveness of the entitys governance, risk management and internal control processes
4 examples of things internal audit looks into that external auditors dont
companys reputation
compliance
impact on the environment
employee satisfaction
7 internal audit assignments
operational audits value for money audits IT audits financial audits compliance audits fraud investigations customer experience audits
3 qualities needed of internal audit
independence
objectivity
due skill and care
what does it mean for internal auditors to be independant
not involved in the design, installation or implementation of operation systems
what does it mean for internal auditors to have due skill and care
need for internal auditors to have wide range of skills as well as ongoing training
