Corporate Governance and Ethics

Chapter 12

Technology and Corporate Governance

INTRODUCTION

INFORMATION TECHNOLOGY

CYBERCOMPANY MODEL

EXTENSIBLE BUSINESS REPORTING LANGUAGE

CONTINUOUS AUDITING

SUMMARY

KEY TERMS

REVIEW QUESTIONS

DISCUSSION QUESTIONS

NOTES

INTRODUCTION

Technology plays an important role in corporate governance, particularly in improving and automating the compliance process in the post–corporate governance reforms era. Section 404 compliance of SOX reveals significant control deficiencies in the use of IT. The proper use of technology to automate controls and the financial reporting process enables companies to improve the quality of both financial and nonfinancial information on their KPIs, strengthen accountability of functional responsibilities (e.g., production, sales, marketing, accounting), and ensure compliance processes are performed in accordance with sustainable strategies. The effectiveness of all corporate governance functions depends on the quality of support received from the IT function. The IT function enables other corporate governance functions to operate in real-time, online processes facilitating simultaneous decision making, continuous monitoring, instantaneous assessment electronic reporting, and continuous auditing. This chapter discusses the use of IT in improving corporate governance effectiveness.

Primary Objectives

The primary objectives of this chapter are to

• Address the broad influence of technology in twenty-first-century corporate governance.
• Introduce a theoretical ...