The board of directors usually consists of a development strategy committee, nomination committee, remuneration committee and audit committee. The main duties of the audit committee are: (1) to monitor the adequacy and effectiveness of the internal control of the company, in particular, to focus on the control of moral behavior." Enron incident, "the proof of a breach of ethical code of conduct is the culprit of the company's disaster.
"Enron" individual executives in order to increase the value of stock option about Enron Corp's financial performance for many years. Their actions were not found by the board of directors, auditors, rating agencies, regulators and media for many years until the company eventually collapsed and went bankrupt.If there is a more effective system of governance, many years ago will find that this behavior and management will be replaced
(2) to monitor the financial reporting process, to ensure that the financial report is reliable.
(3) supervise the work of the external audit and internal audit. After Enron event, IIA proposed to the United States Congress, all listing Corporation should establish a direct report to the audit committee of internal audit institutions.
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