Auditors and Corporate Governance

Auditors and Corporate Governance

Corporate governance
There are various new expectations of regulatory as well as investor communities from the
corporate houses with each passing year. This has encouraged the adoption and implementation
of corporate governance principle by them. The internal audit functions should be conducted
within the arena of corporate governance according to the recent guidance notes (Corporate
Governance, 2018). This improves the risk management process of the company by making it
more effective and holistic.
Principal 1: provides a strong foundation for the management and oversight
The influence on the corporate houses on adopting it fully on:
Risk assessment process- in this case, the risk assessment process comprises of evaluating the
members before appointing it to the board or the management. A person's credibility and his
experience in the past has to be known before appointing him. The company must get
information about the history of a person as well as the dictatorships that are currently held or
that was held in the past (Corporate Governance, 2018).
Audit approach
The board and the management of the company must look upon the effectiveness by which the
activities are carried out. Few points have to be taken into consideration for the audit approach:
 The terms of appointment should be defined in a written agreement with the senior
directors and the executive (Tricker & Mallin, 2012).
 To ensure the efficient functioning of the board, the Company Secretary has to be directly
accountable.
 There should be an existence of the diversity policy.
 The performance of the board member should be evaluated periodically.
 The performance of the senior executive should be evaluated on an annual basis
(Corporate Governance, 2018).
Many times, an external agency or third party is appointed for evaluating the performance.
Principal 2: structure the board to be effective and add value
The full adoption would influence on:
Risk assessment process- In this case, the risk assessment process involves an introduction of
board skills Matrix which will help in setting up of the mixture of skills that is comprised by the
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Corporate governance
board currently or a possible skill matrix that the board can have for achieving its future targets
(Kowaleswski, 2016). This helps in increasing the accountability of the board members and
ensuring that the business issues are resolved with the help of the skills of the members
(Corporate Governance, 2018).
Audit approach - certain points have to be mentioned such as names of all the independent
directors along with the tenure of service that is being provided by each director. There should
also be a mention about the interest or a position of a particular director and whether there is any
chance that his Independence will have interfered (Tricker & Mallin, 2012). It should be noted
that the independent directors should be present in the majority
Principal 3: install a culture of acting lawfully, ethically and responsibly.
The full adoption will influence on:
Risk assessment process- Any kind of unethical behavior whether inside or outside the
organization can cause used damage to the organization. Thus, to avoid such a risk a proper
internal control system has to be set up so that the business is carried out fairly and the number
of frauds decreases (Corporate Governance, 2018).
Audit approach- the senior executive must approve the values and such value should be
communicated to all the employees in the company. The board must plan to provide training to
its employees regarding the stated laws and principles that are followed by an organization
(Ghafran & Sullivan, 2013).
Principal 4: Safeguard integrity of Corporate reports
The adoption of this principle will influence on:
Audit approach- a specific criterion has to be met for appointing the members of the audit
committee (Corporate Governance, 2018). The external as well as internal auditor’s independent
performance can be decided only by the audit committee.
Audit strategy- a corporate report should be made public ok only after confirming that the report
provides all material information to the stakeholders. There are certain audit strategies and
criteria that are available for preparing public reports (Ghafran & Sullivan, 2013). Such criteria
and strategies should be followed to gain the confidence of the investors and help them in taking
their decisions wisely.
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