CORPORATE GOVERNANCE, ETHICS & SOCIAL RESPONSIBILITY
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CORPORATE GOVERNANCE, ETHICS & SOCIAL RESPONSIBILITY. AUDIT, CONTROLS AND COMPLIANCE. Distinction Between Auditing and Accounting Accounting Recording, classifying, and summarizing information for decision making by management and other users Auditing

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CORPORATE GOVERNANCE, ETHICS & SOCIAL RESPONSIBILITY

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Corporate governance ethics social responsibility

CORPORATE GOVERNANCE, ETHICS & SOCIAL RESPONSIBILITY

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

AUDIT, CONTROLS AND COMPLIANCE

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

  • Distinction Between Auditing and Accounting

  • Accounting

  • Recording, classifying, and summarizing information for decision making by management and other users

  • Auditing

  • Concerned with verifying whether recorded transactions properly reflect the economic events the occurred during the accounting period

  • Since accounting information is properly recorded, auditor must thoroughly understand these rules

  • Accumulates and interprets audit evidence

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

Distinction Between Internal and External Auditing

Internal Auditing

An organization control feature, which measure and evaluates the effectiveness of other organized controls. Internal auditors conduct operational audits and are compensated by their employer organizations.

External Auditing

In contrast independent auditing done by CPA’s is a society control external, financial information users. External auditors and audit fees are paid by the organization audited.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

Auditing

External Auditing:

- the examination of financial statements by the independent auditor for the purpose of expressing opinion on the fairness with which they present financial position, results of operations, and changes in financial position in conformity with generally accepted accounting principles.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

Auditing

Internal Auditing:

- an independent appraisal activity within an organization for the review of the operations as a service to management.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

CORPORATE AUDIT DEPARTMENT

CORPORATE AUDIT DEPARTMENT


Corporate governance ethics social responsibility

ORGANIZATIONAL STRUCTURE

AUDIT DIRECTOR

REVENUE AUDIT MANAGER

INTERNAL AUDIT MANAGER

MANILA AUDIT TEAMLEADER

HOTELS & FTRDC TEAMLEADER

MOTELS , FSL, VITAL-C, MSBC TEAMLEADER

IT AUDIT TEAM

FINANCIAL AUDIT TEAMLEADER

SYSTEMS AUDIT TEAM

SPECIAL SERVICES TEAM

REVENUE AUDIT STAFF

INTERNAL AUDIT STAFF

CORPORATE AUDIT DEPARTMENT


Corporate governance ethics social responsibility

BS - ACCOUNTANCY

BSC-MANAGEMENT ACCOUNTING

BS – TOURISM / HRM

BS – COMPUTER ENGINEERING

BS – INDUSTRIAL ENGINEERING

BS - INFORMATION TECHNOLOGY

BS – COMPUTER SCIENCE

CORPORATE AUDIT DEPARTMENT


General responsibilities

General Responsibilities:

  • Revenue Audit Section:

    Responsible in ensuring that the revenue of the SBU is accounted for.

  • Internal Audit Section:

    Performs Internal Audit functions of the Company in accordance with the instructions and Audit Program Guides provided by the Corporate Audit Officers that would cover Operations, Financial, Compliance, Systems, IT and Risk-based audits.

CORPORATE AUDIT DEPARTMENT


Corporate governance ethics social responsibility

  • Objectives of Internal Auditing

  • Assist all members of management in the effective discharge of their responsibilities by furnishing them with analyses, appraisals, recommendation and pertinent comments concerning activities reviewed.

  • Internal auditors are concerned with any phase of business activity in which they may of service to management.

  • Goes beyond the accounting and financial records to obtained full understanding of the operations under review.

    -Institute of Internal Auditors Statement of Responsibilities of Internal Auditors

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

STEPS IN CONDUCTING AUDIT

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONS AUDITING

Is a systematic process of evaluating an organization’s effectiveness, efficiency and economy of operation under management’s control and reporting to appropriate persons the results of the evaluation along with recommendations for improvements.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONAL AUDIT

The general objective of the operational audit is “to assist all members of management in the effective analysis, appraisals, recommendations and pertinent comments concerning the activities reviewed” in such matters as:

1. The adequacy of the control structure for which the operating department is responsible.

2. Departmental control over its operations in relation to company policies, other departments, requirements of departmental management, and financial and accounting matters.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONAL AUDIT

The underlying concept is that wherever we audit, and whether we use financial or operating records as basis, we audit from a management or businessman’s standpoint – the effect of activities on the company’s position – and not simply as verifiers of account, accuracy & propriety.

Objectivity is “representing things as they are, unbiased by opinions or habits of thought”.

The audit of any department or function comprised four basic steps such as familiarization, verification, evaluation and reporting recommendations

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

System Flow Chart

A customer arrives

Gallery

Restaurant

Member?

No

Enjoy service

Pay for Day Card only.

Pay addl bill & get Exit Pass at end of service

Yes

Receive Service Pass

Pay Visiting Player Card

Submit VPC

Front Desk

Swipe card

Purchase service, claim consumable, submit Day Card

Present Exit Pass

No

Pay Guest Player Card

Submit GPC

Locker room

Register

Dress up

Playing Badminton?

No

Yes

Service Desk

Service Desk

Service Desk

Hosted by member?

Service Desk

Yes

Return E-pass, pay charges

Get E-pass & Badminton Service Pass

Return towel

Exit (End)

Finish Badminton

Remove E-pass fr slot

No

Member?

Play Badminton

E-pass slot

Laundry Station

Front Desk

Yes

Get exit pass, show to

Submit SP, claim towel

Put E-pass in slot

Swipe card

Playing Badminton?

Yes

submit ID card

No

Show ID card

Exit (End)


Corporate governance ethics social responsibility

PETER’S MATRIX

FINDING/S

ROOT CAUSE/S

RISK/S

RECOMMENDATION/S

ACTION TAKEN

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONAL AUDIT

In general, internal operational audits are conducted for any one on more of six different purpose.

. Appraisal

. Compliance

. Protection of assets

. Verification

. Appraisal of performance

. Recommendation

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONAL AUDIT

In general, internal operational audits are conducted for any one on more of six different purpose.

. Appraisal

The internal auditor should determine whether controls are sound & adequate in light of organization for which they are designed.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

  • OPERATIONAL AUDIT

    In general, internal operational audits are conducted for any one on more of six different purpose.

    . Appraisal

    . Compliance

  • Instituting controls is meaningless unless controls are complied with.

  • Purpose of compliance audit is to determine whether specific control policies, programs, or procedure are operating satisfactorily.

  • Focus not so much on effects of non compliance, but preventing future non-compliance.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONAL AUDIT

In general, internal operational audits are conducted for any one on more of six different purpose.

. Appraisal

. Compliance

. Protection of assets

Purpose of reviews is to determine whether assets are properly accounted for and safeguarded from losses.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONAL AUDIT

In general, internal operational audits are conducted for any one on more of six different purpose.

. Appraisal

. Compliance

. Protection of assets

. Verification

Operational audits are designed to verify accuracy are reliability of internal management reports.

Focus is not necessarily to respond to result of inaccurate or unreliable data, but on the critical issue of promoting accuracy and reliability.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONAL AUDIT

In general, internal operational audits are conducted for any one on more of six different purpose.

. Appraisal

. Compliance

. Protection of assets

. Verification

. Appraisal of performance

As a major operational control over organization effectiveness, internal auditors are frequently called upon to appraise employee performance.

Employee-performance reviews can represent the one operational audit activity least consistent with the boundaries of an internal auditor’s professional expertise.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

OPERATIONAL AUDIT

In general, internal operational audits are conducted for any one on more of six different purpose.

. Appraisal

. Compliance

. Protection of assets

. Verification

. Appraisal of performance

. Recommendation

Although not an audit activity, recommending operating improvements is the most significant by-product of the internal auditor’s professional role.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

  • FRAUD AUDIT

  • Integrity Risk:

    • Management Fraud

      • - fraud committed for the benefit of the company

    • Employee Fraud

      • fraud committed for the benefit of another person / employee and to the detriment of the company.

    • Illegal Acts

    • Unauthorized use

    • Reputation

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

THE FRAUD TRIANGLE

Why good people do wrong?

Pressure (Real or perceived)

Opportunities, Consequences Rationalization

and Likelihood of Detection

(Real or Perceived)

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

MOTIVES OF FRAUD

Personal

Cure financial problems

Enhance lifestyle

Revenge against company

Conceal illegal acts

Cure perceived injustice

Ego—“beat the system”

Personal ambition

Meet incentive awards

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

MOTIVES OF FRAUD

Corporate

Reach or exceed quotas or goals

Increase popularity and reputation

Maintain ability to borrow

Manipulate stock price / value

Meet regulatory requirements

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

FRAUD DETECTION & DETERRENCE

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

  • FRAUD DETECTION & DETERRENCE

  • The Three Principal Lines of Defense:

  • First Line – Code of conduct and business ethics policies and procedures

    • Based on an assessment of the possible risks facing the company, an understandable written employee code of conduct and business ethics document should be in place.

  • Second Line – Internal control and Management control structure

    • An effective internal control and management organization structure provides both prevention and detection elements, but not significant deterrence!

  • Third Line – Internal Audit activities

    • Based on risk assessment of fraud and illegal acts, internal audit evaluates the 1st and 2nd line of defense mitigators.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

  • Internal Audit is responsible for:

  • Ensuring the existence of control w/ systems designed to prevent or deter the forms of fraud.

  • Identifying areas of risks where theft or manipulation may be likely to occur.

  • Ensuring adequacy and effectiveness of controls in financial accounting and other areas subject to theft, fraud or embezzlement.

  • Exercising the care and skill of a reasonably prudent and competent professional.

by: JAYNARD S. SOLANTE


Corporate governance ethics social responsibility

The distinction between an Honest Mistake and Fraud is the underlying INTENTION behind the ACTION.

by: JAYNARD S. SOLANTE


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