Presentation Chapter 6

Presentation Chapter 6 - Roles and Responsibilities of...

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Roles and Responsibilities of Management Chapter VI
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Chapter Objectives: Introduce the managerial function of corporate governance. Understand the roles, responsibilities, and duties of corporate senior executives, including the CEO and CFO. • Identify the components of executive compensation, and illustrate how each of these components relates to effective corporate governance. • Identify the financial reporting requirements of public companies and SOX provisions that pertain to management certifications of financial reports and internal controls. • Be aware of financial reporting challenges facing public companies, including off balance sheet arrangements, aggregate contractual obligations, and critical accounting policies and practices. • Discuss management’s responsibilities for ICFR. • Provide an overview of the costs and benefits resulting from Section 404 compliance . Video ( Video)
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Key Terms Chief audit executive (CAE) Chief risk officer (CRO) Corporate development officer (CDO) Enterprise risk management (ERM) Extensible Business Reporting Language (XBRL) Financial Accounting Standards Board (FASB) Institute of Internal Auditors Research Foundation International Accounting Standards Board (IASB) International Financial Reporting Standards (IFRS) Joint Committee on Taxation Other postemployment benefits (OPEB) Tax shelter
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Management Responsibilities Operating Process. The operating process entails: (1) operating activities of designing products and services, marketing and delivering products, invoicing products, and servicing customers; (2) investing activities of investing in both human and capital resources; and (3) financing activities of funding investments and expenditures through internal growth, issuing stocks, or incurring debt. Financial Reporting Process. Management should report both financial and nonfinancial KPIs that assist investors to predict the company’s future cash flows from operating, investing, and financing activities. Compliance Process. The compliance process involves compliance with all applicable rules, regulations, laws, and standards, including regulatory, legal, tax, environmental, social, and ethical standards and best practices.
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Management Pre-SOX Information asymmetry between management and owners Post-SOX New certification requirements § Assessment of disclosure controls and procedures § Assessment of internal controls and procedures over financial reporting Plan to comply with accelerated filing deadlines Prepare for new disclosure requirements Incorporate audit and non-audit service pre-approval procedures Enhanced code of ethics for senior officers Increased time and attention to governance activities 5
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Corporate Officers CEO.
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