Roles of auditors in enhancing corporate governance

1. ROLES OF AUDITORS IN ENHANCING
CORPORATE GOVERNANCE
ETHICS AND CSR
PRESENTED BY- DEPARTMENT: BACHELOR OF BUSINESS
ADMINISTRATION
YEAR:1ST, SEM:1
NAME: SOUMYAJIT BANERJEE
STUDENT CODE: BWU/BBA/18/020

2. CONTENTS
– AUDITOR
– TYPES OF AUDITOR
– CORPORATE GOVERNANCE
– NECESSITY FOR CORPORATE GOVERNANCE PRACTICE
– THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE
AND INTERNALAUDITING
– CORPORATE GOVERNANCE AND THE BOARD OF
DIRECTORS
– GOOD AND BAD GOVERNANCE

3. AUDITOR
– AN AUDITOR IS A PERSON OR A FIRM APPOINTED
BY A COMPANY TO EXECUTE AN AUDIT.
– TO ACT AS AN AUDITOR, A PERSON SHOULD BE
CERTIFIED BY THE REGULATORY
AUTHORITY OF ACCOUNTING AND AUDITING OR
POSSESS CERTAIN SPECIFIED QUALIFICATIONS.
– GENERALLY, TO ACT AS AN EXTERNAL AUDITOR
OF THE COMPANY, A PERSON SHOULD HAVE A
CERTIFICATE OF PRACTICE FROM THE
REGULATORY AUTHORITY

4. TYPES OF AUDITOR
– EXTERNAL AUDITOR/ STATUTORY AUDITOR IS AN
INDEPENDENT FIRM ENGAGED BY THE CLIENT
SUBJECT TO THE AUDIT, TO EXPRESS AN OPINION
ON WHETHER THE COMPANY'S FINANCIAL
STATEMENTS ARE FREE OF MATERIAL
MISSTATEMENTS, WHETHER DUE TO FRAUD OR
ERROR.
– INTERNAL AUDITORS ARE EMPLOYED BY THE
ORGANIZATIONS THEY AUDIT. THEY WORK FOR
GOVERNMENT AGENCIES (FEDERAL, STATE AND
LOCAL); FOR PUBLICLY TRADED COMPANIES; AND
FOR NON-PROFIT COMPANIES ACROSS ALL
INDUSTRIES.

5. CORPORATE
GOVERNANCE:
– CORPORATE GOVERNANCE INVOLVES A SET OF
RELATIONSHIPS AND THE NETWORK BETWEEN A
COMPANY’S MANAGEMENT, ITS BOARD OF
DIRECTORS, SHAREHOLDERS AND
STAKEHOLDERS.

6. NECESSITY FOR
CORPORATE GOVERNANCE
PRACTICE
– • PREVENT DOMINANCE BY SELF-SEEKING CHIEF
EXECUTIVE OFFICERS (CEOS).
– • ELIMINATE THE RISK OF MISLEADING OR FALSE
FINANCIAL REPORTING.
– • ENHANCE CONFIDENCE IN COMPANY’S
MANAGEMENT.
– • HIGHER PROBABILITY OF SUCCESS. GOOD
GOVERNANCE AND GOOD LEADERSHIP IN
MANAGEMENT OFTEN GO TOGETHER.
– • STRONG REPUTATION AND THEREFORE LESSER
LIKELIHOOD OF EXPOSURE TO REPUTATIONAL RISK

7. THE RELATIONSHIP BETWEEN
CORPORATE GOVERNANCE AND
INTERNAL AUDITING
– VIRTUALLY ALL GUIDELINES ON SOUND
CORPORATE GOVERNANCE PRACTICE, INCLUDES
RECOMMENDATIONS FOR RISK MANAGEMENT
THROUGH INTERNAL CONTROL AND AUDIT AS A
CRITICAL PART OF THE GOVERNANCE MOSAIC. THIS
RELATIONSHIP CAN BE SEEN AS AN INTRICATE PART
OF THE STEWARDSHIP MODEL OF CORPORATE
GOVERNANCE.
– THE INTERNAL AUDIT PROFESSION HAS GONE
THROUGH A SIGNIFICANT REVOLUTION AND HAS
RECEIVED RENEWED EMPHASIS INTERNATIONALLY.

8. CORPORATE
GOVERNANCE AND THE
BOARD OF DIRECTORS
– THE BOARD OF DIRECTORS IS THE PRIMARY DIRECT STAKEHOLDER
INFLUENCING CORPORATE GOVERNANCE.
– DIRECTORS ARE ELECTED BY SHAREHOLDERS OR APPOINTED BY OTHER
BOARD MEMBERS, AND THEY REPRESENT SHAREHOLDERS OF THE
COMPANY.
– THE BOARD IS TASKED WITH MAKING IMPORTANT DECISIONS, SUCH AS
CORPORATE OFFICER APPOINTMENTS, EXECUTIVE COMPENSATION AND
DIVIDEND POLICY.
– BOARDS ARE OFTEN MADE UP OF INSIDE AND INDEPENDENT MEMBERS.
INSIDERS ARE MAJOR SHAREHOLDERS, FOUNDERS AND EXECUTIVES.
– INDEPENDENT DIRECTORS DO NOT SHARE THE TIES OF THE INSIDERS, BUT
THEY ARE CHOSEN BECAUSE OF THEIR EXPERIENCE MANAGING OR
DIRECTING OTHER LARGE COMPANIES.
– INDEPENDENTS ARE CONSIDERED HELPFUL FOR GOVERNANCE BECAUSE
THEY DILUTE THE CONCENTRATION OF POWER AND HELP ALIGN
SHAREHOLDER INTEREST WITH THOSE OF THE INSIDERS.

9. GOOD AND BAD
GOVERNANCE
– COMPANIES THAT DO NOT COOPERATE SUFFICIENTLY WITH AUDITORS
OR DO NOT SELECT AUDITORS WITH THE APPROPRIATE SCALE CAN
PUBLISH SPURIOUS OR NONCOMPLIANT FINANCIAL RESULTS
– . BAD EXECUTIVE COMPENSATION PACKAGES FAIL TO CREATE
OPTIMAL INCENTIVE FOR CORPORATE OFFICERS.
– POORLY STRUCTURED BOARDS MAKE IT TOO DIFFICULT FOR
SHAREHOLDERS TO OUST INEFFECTIVE INCUMBENTS
– . CORPORATE GOVERNANCE BECAME A PRESSING ISSUE FOLLOWING
THE 2002 INTRODUCTION OF THE SARBANES-OXLEY ACT IN THE
UNITED STATES, WHICH WAS USHERED IN TO RESTORE PUBLIC
CONFIDENCE IN COMPANIES AND MARKETS AFTER ACCOUNTING
FRAUD BANKRUPTED HIGH-PROFILE COMPANIES SUCH
AS ENRON AND WORLDCOM.

10. THANK YOU