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supervision must be shown by managers regarding steps taken to establish and sustain ethics andintegrity programs set by organizations are being fulfilled by employees.Part B:Strengths: SHR corporation has a comprehensive written code of conduct which applies to directors,management and employees. The code of conduct is posted on the company website andintranet and also given to new hires. There is a whistleblower program in place which includes an anonymous hotline foremployees and third parties to report suspected violations of the Code.
Weaknesses: It has been 3 years since the code of conduct has been initiated. A possible risk arises ifthe code of conduct is not reviewed and updated as per IIA by senior management. Torectify this weakness management should develop a tendency of reviewing and updatingCode of conducts annually. The audit committee’s charter does not include an explicit provision for overseeing seniormanagement’s ethical conduct or monitoring its adherence to prescribed internal controlpolicies and procedures. To rectify this weakness, there should be more monitoring interms of management ethical conduct. Only 75% of managers and employees responded to the survey regarding the companyethics program. For a better outcome, management should indicate the importance of thesurvey and may also introduce incentives upon completion of surveys. Overall, effective monitoring incorporates appropriately reporting the key internal controldeficiencies to the senior management and audit committees. For SHR’s entity-level controls tobe more effective, they need to involve independent evaluation by independent auditors to assessany risk of material misstatement of financial statements. They must also take into considerationthat inherent risk has amplified due to the challenges the organization is facing. b. The entity-level controls might affect senior managers and employees’ behaviour/decisions inthe sense that it allows employees and managers conduct their management directions thatpertain to the entire entity and lacks shareholders value given possible risks the company nowfaces. Based on those risks, entity-level control will require the management of the company toassess then report on the effectiveness of the internal control of the company. The company's