2) The board of directors demonstrates independence from management and exercises over-sight over development and performance of internal control. The board of directors is responsible for setting corporate policy and for seeing that the company is operated in the best interest of its own-ers, the shareholders. The attention and direction provided by the directors are critical. The board of directors should have a sufficient number of members who are independent from man-agement (not employed full-time by the company in management positions) to be independent and objective in its evaluations and decision-making. Independence of the board from management is critical, so that if necessary, difficult and probing questions will be raised. Board and audit committee members should hold regular meetings with chief financial and account-ing officers and internal and external auditors. Sufficient and timely information should be provided to board and audit committee members. (The responsibilities of the board of directors and of the au-dit committee are discussed in more detail later in this textbook.) The board of directors has oversight responsibility for internal control, but the Chief Executive Officer and senior management have direct responsibility for developing and implementing the organiza-tion’s internal control system.
Posted on: Mon, 24 Nov 2014 08:34:34 +0000
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