supervision must be shown by managers regarding steps taken to establish and

Supervision must be shown by managers regarding steps

This preview shows page 4 - 6 out of 7 pages.

supervision must be shown by managers regarding steps taken to establish and sustain ethics and integrity 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 and intranet and also given to new hires. There is a whistleblower program in place which includes an anonymous hotline for employees and third parties to report suspected violations of the Code.
Image of page 4
Weaknesses : It has been 3 years since the code of conduct has been initiated. A possible risk arises if the code of conduct is not reviewed and updated as per IIA by senior management. To rectify this weakness management should develop a tendency of reviewing and updating Code of conducts annually. The audit committee’s charter does not include an explicit provision for overseeing senior management’s ethical conduct or monitoring its adherence to prescribed internal control policies and procedures. To rectify this weakness, there should be more monitoring in terms of management ethical conduct. Only 75% of managers and employees responded to the survey regarding the company ethics program. For a better outcome, management should indicate the importance of the survey and may also introduce incentives upon completion of surveys. Overall, effective monitoring incorporates appropriately reporting the key internal control deficiencies to the senior management and audit committees. For SHR’s entity-level controls to be more effective, they need to involve independent evaluation by independent auditors to assess any risk of material misstatement of financial statements. They must also take into consideration that 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 in the sense that it allows employees and managers conduct their management directions that pertain to the entire entity and lacks shareholders value given possible risks the company now faces. Based on those risks, entity-level control will require the management of the company to assess then report on the effectiveness of the internal control of the company. The company's
Image of page 5
Image of page 6

You've reached the end of your free preview.

Want to read all 7 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture