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On the corporate governance and internal control integration

Author: RenGuiFang From: www.yourpaper.net Posted: 2009-04-30 10:58:04 Read:
[Abstract] This article explains corporate governance and management, and analysis of the development of relations of internal control and corporate management, and as an opportunity to the formation of integrated systems and integrated system elements synergies key demonstration of corporate governance and internal control .

, Corporate governance and management interpretation

Corporate Governance (Corporate Governance) essentially is a mechanism, the core is in the framework of laws, regulations, practices, to ensure that the interests of the shareholders as the main stakeholder set of rights arrangements, division of responsibilities and restraint mechanisms. This responsibility, rights, and interests of the arrangements for scientific or not is one of the most important determinants of corporate performance. Company management is to implement decisions to fulfill our mission to achieve the specific activities of the target, its core is to determine ways to achieve the objective.
Corporate governance is different from the management of the company. Corporate Governance care company should where to go, company management concern is how to get there, that management is the management and operation of governance is to ensure that this operation and the operation on the right track, governance provisions of the basic network of the entire business operations framework, management is in this established under the framework of their enterprises toward the target, if the good governance model is the foundation, the blueprint, the smooth flow of the corporate governance system is the top of the building, is the actual content.
The relationship between corporate governance and management in a dynamic development. The early management focus on the operational level, the individuals and groups conducting various activities efficiency, focus on basic management and functional management, the content and corporate governance is almost split. In the 1980s, due to the fierce competition to develop the strategy has become the primary consideration in the development of enterprises, strategic management of the company's management shift to strategic planning and implementation of the strategy, the process is generally made by the general manager strategic move that, after approved by the Board of Directors (AGM) approved, then decomposed by the general manager of the organization, follow-up and implementation, supervision and control of this process by the Board. Participants in the strategic management including corporate governance at all levels, including the company's management at all levels of governance layer is responsible for the authorization and supervision of management responsible for proposing and implementing. As a result, the connection between corporate governance and management that the company's strategic management level. In other words, from Taylor's scientific management ideas, Mayo interpersonal theory, Porter's Competitive Strategy of Hammer's reengineering theory, management theory and management practices range from small to big, by rigid management measures gradually development to focus on the organization, individual behavior flexible management philosophy, the development of enterprise operations management level to the full range of management from strategy to operations. This transformation enables the company management and corporate governance began to have common areas, and increasingly integrated.

Second, the company management and internal control development of relations

Internal control for enterprises to achieve the objective to provide reasonable assurance policies, procedures and processes. It is a very close relationship with the company management, the boundaries are gradually blurred.
Internal control concern from the initial stage to contain troubleshooting a variety purposes, concern a variety of measures to control the dichotomy stage and Hennessy two objectives to the overall architecture phase to the effectiveness and efficiency of operations, reliability of financial reporting and related compliance for the purpose of , to the modern internal control for the Enterprise Risk Management Framework (ERM) strategy, operations, reporting and compliance as the goal, we can see that the internal control objectives expanding its level is increased by the management of the operating layer from the strategic layer The entire management process.
Initial post-separation, reconciliation as the main content internal to contain very simple. The control structures stages controlled by the control environment, the three elements of the accounting system and control procedures a flat triangular structure, the overall structure of stage-rich elements and clear relationships and interactions between them, that is controlled by the control environment, risk assessment, control activities, monitoring, information and communication is composed of the five elements of a pyramidal structure. Enterprise risk management framework has been developed for modern internal control proposed structure of the cube, the new goal setting, event identification and risk response to the three elements tend to be more accurate risk assessment, the expansion of information and communication elements. Consider from the history, present and future potential events and communication, and require integration with enterprise information systems, ERM also includes a third dimension - business management at different levels, in addition to the objectives and elements outside the two dimensions. Thus, the internal control structure from simple to complex, extended to the global small corner from the company's management.
Internal control structure was first proposed constituent elements, including: control environment, control activities and accounting systems. To control the overall architecture phase expansion of the elements of content, risk assessment and supervision of these two elements not originally included. ERM overall structure refinement, the internal environment, objective setting, event identification, risk assessment, risk response, control activities, information and communication and supervision of eight elements. Predictably, the elements of internal control is even more fine and clear.
In short, the internal control functions from the company's management evolution is gradual integration with the company management. Internal restraints assumed control a small part of the duties. Internal accounting controls to protect property safety and financial information is reliable play control functions. Internal management control focus on the match and improve business efficiency and organizational plan, these are the internal control functions of the traditional. Control structure for the first time the elements of the control environment, including the Board of Directors and its special committees, management ideas and management style in a controlled environment, those involved in the strategic management level, but only passively reflect the static content, overall internal control structure the first mention of the elements of risk assessment, asked to identify the impact on the various risks of the organization's objectives and to assess the extent of the impact and the likelihood of a preliminary exploration, risk-oriented strategic management, risk management framework, modern internal control of the content of the specific content to more fully reflect the company's risk management and consider risk until risk identification, risk assessment, risk response, as well as specific control activities from the strategic objectives set the framework implicit control and corporate governance. integration, involvement at all levels of the company management, control and management of the boundaries being blurred. The formation of the integrated system of corporate governance and internal control

Mentioned above, corporate governance and management has been increasingly integrated, the commonalities between them lies in strategic management, internal control have been involved in the strategic level, including all levels of management, control and management of the boundaries are gradually become blurred. Therefore, corporate governance and internal control these two subsystems are close to each other in a dynamic Chiang Kai-shek, into one system. Modern corporate governance is to establish a scientific decision-making mechanism, the development of the company's vision, mission and goals as well as the corresponding target the decision-making, and to cope with risks from the strategic level to ensure that companies maximize the value. Consider the interests of the company on the basis of interest, to achieve the maximization of shareholder value in the long term. Modern internal control function is to establish risk management system in all aspects of corporate governance activities. According to the established companies target identification, control, and manage risk, the goals for the company to provide reasonable assurance. The overall function of the performance of the integrated system is not the same as corporate governance is added to the simple elements of internal control function, but rather reflects the overall function of the amplification effect, the reason is the synergy of the elements of the system are analyzed as follows:
Consistent with the goal of corporate governance and internal control work together, both inside and outside the corporate fiduciary duties to be uniform conditions. On the one hand, the modern corporate governance goal is to take full account of stakeholder interests based on increased value of the company, so as to maximize shareholder value. Internal control will focus on the impact of the various risks to achieve the objective. Risk management to help enterprises to seize the opportunity to develop, to reduce the impact of negative risk, increase corporate value. Both unity of purpose, work together, bound together to reduce the uncertain environment - in particular, the risk of integrated systems, to achieve the ultimate goal to increase corporate value. On the other hand, the external fiduciary responsibility is to assume fiduciary responsibility of the company operating the owners and stakeholders, internal fiduciary duty fiduciary responsibility is assumed by the company under the management and staff of the upper management. The key to modern multi-level fiduciary responsibility to fulfill that goal congruence. Make foreign fiduciary duty to effectively fulfill corporate governance layer must be broken down to the internal management of the Company must be high-level internal fiduciary duty decomposition to lower this down to every level must remain the same objectives. Corporate governance is to communicate the external fiduciary duties and internal fiduciary responsibility bridge, internal control is to ensure that the of internal fiduciary duty on target to fulfill mechanism, integration of the two can cause decomposition process of the same objectives to the fiduciary duties. Feedback mechanism as an integrated system - internal audit, corporate governance and internal control to be able to provide information to promote the external fiduciary duties properly decomposition to the internal level, the formation of a top-down, from outside to inside the uniform fiduciary duty .
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