Ch02 ManAcct4eupdated

Ch02 ManAcct4eupdated - Chapter2 CorporateGovernance...

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1 Chapter 2 Corporate Governance  and Ethics
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2 Introduction Companies need strong corporate governance  and sound ethical practices: Scandals cause the public to  lose faith  in the  company Strong governance and sound ethics serve to  make  management more accountable  to a range of  stakeholders, including employees, investors, and  customers Both  internal and external forces  shape a company’s  system of corporate governance and internal control
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3 Corporate Governance Embodied in the processes that companies  use to promote: Corporate fairness Complete and accurate financial  disclosures Management accountability
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4 Corporate Governance Legal and regulatory requirements  impact  corporate governance Board of Directors meets with auditors Audit committee composed entirely of  independent directors No one set of corporate governance  processes will fit all corporations Tailored  to fit size, complexity of  operations, stakeholders, and unique  business risks
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5 Internal Control  Internal Control:  The policies and procedures that provide reasonable assurance that a company’s goals and objectives will be achieved. Comprised of five elements: 1. The control environment. 2. Risk assessment 3. Control activities 4. Information and communication 5. Monitoring  
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6 Elements of Internal  Control The Control Environment Risk  Assessment Control Activities Information Communication Monitoring
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7 Control Environment Owners’ and managements’  attitudes  and general philosophy  about internal  control and accountability Organizational structure Human resources policies Commitment to competence Oversight by company’s board of  directors
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This note was uploaded on 08/30/2011 for the course ART 3514 taught by Professor Dhbannan during the Summer '03 term at Virginia Tech.

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Ch02 ManAcct4eupdated - Chapter2 CorporateGovernance...

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