Accounting Information Systems: The Processes and Controls, 2nd Edition

CORPORATE GOVERNANCE IN ADMINISTRATIVE PROCESSES AND REPORTING (STUDY OBJECTIVE 8)

The four primary functions of the corporate governance process—management oversight, internal controls and compliance, financial stewardship, and ethical conduct—were introduced in Chapter 5. Each of these functions is applicable to the administrative and reporting processes, as these processes must include a proper corporate governance structure in order to properly deter instances of fraud, theft, and misuse or manipulation of administrative resources and reports.

The systems, processes, and internal controls described in this chapter are part of a corporate governance structure. When management designs and implements administrative processes, it assigns responsibility for executing the related capital, investment, and general ledger functions to various employees. It must be mindful of the risks of stolen or misused capital, alteration of documents or reports, and other frauds in this process. Accordingly, it must also implement and monitor internal controls to minimize these risks. As management considers these assignments and monitors the underlying processes and controls, it is carrying out its corporate governance functions of proper management over sight and internal controls and compliance.

In recent years, the corporate governance process for many companies has been challenged by the adoption of the Sarbanes-Oxley Act and/or by the company's commitment to converge toward International Financial ...