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By: Stacy Bohne and Mallory Johnson. Corporate Governance and the Controller. Introduction to Corporate Governance Key Components Responsible Parties Issues and Challenges with Corporate Governance Importance of Corporate Governance Fulfillment of internal and external requirements

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Corporate Governance and the Controller

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By stacy bohne and mallory johnson

By: Stacy Bohne and Mallory Johnson

Corporate Governance and the Controller

Topics to cover

  • Introduction to Corporate Governance

    • Key Components

    • Responsible Parties

  • Issues and Challenges with Corporate Governance

  • Importance of Corporate Governance

    • Fulfillment of internal and external requirements

  • Code of Ethics

    • Definition

    • Key Components

    • Survey Results

  • Enforcement and Effectiveness of Internal Policies

    • Video

    • Discussion

Topics to Cover:

What is corporate governance

  • Definition

    • Framework of rules to ensure accountability

  • Key Components

    • Explicit and implicit contracts between firm and stakeholders

    • Procedures for reconciling conflicting interests of stakeholders

    • Procedures for proper supervision, control, and information-flows

    • Key is Balance

  • Responsible Parties

    • Regulatory Body

    • Stakeholders

What is Corporate Governance?

Issues challenges with corporate governance

  • Issues for companies:

    • Provide incentives for the firm to behave ethically

    • Provide transparency to help assure that the firm is doing the right thing

    • Have effective accountability mechanisms if those in the firm, or representing it, are not acting in the best interest of the stakeholders

  • Challenges for companies:

    • Internal Control Requirements

    • Implementation timeframes

    • Roles and workloads of members of Board and Audit Committees

Issues & Challenges with Corporate Governance

Why is corporate governance important

  • Governance surrounds all activities in an organization

  • The independent board of directors is in charge of making sure that the organizations goals are being achieved within the parameters of outlined policies

    • Helps achieve organizational goals in an organized manner and identify risk associated with those objectives.

Why is corporate governance important?

Board of directors

  • Comprised of:

    • An audit committee

    • A compensation committee aligning executive compensation to shareholder value

    • A nominating committee ensuring effective governance of the board

    • The board is responsible for authorizing, directing, and overseeing management toward the achievement of the organizational objectives.

Board of directors

Section 406 of sox

Requires companies to disclose whether or not, and if not, the reason therefore, the company has adopted a code of ethics for senior financial officers, applicable to its principal financial officer and controller or principal accounting officer or persons performing similar functions.


Section 406 of sox1

Just handing out a code of ethics is NOT enough.

Requires issuance of code of ethics to be disclosed in financial reports

Public companies must have a system in place to effectively address ethics within their organization

SECtion 406 of sox

What and why

  • Definition

    • A code of ethics is a set of guidelines which are designed to set out acceptable behaviors for members of a particular group, association, or profession

  • Purpose

    • Each code of ethics is unique to its specific organization but should support the mission statement.

What and why?

How are codes of ethics derived

  • Step 1

    • Develop a mission statement

  • Step 2

    • Understand the risk environment

  • Step 3

    • Summarize ethics survey results

How are codes of ethics derived?

Just for fun can you guess the company

  • To inspire and nurture the human spirit— one person, one cup, and one neighborhood at a time.

    • Starbucks

    • Our mission is to make _______the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less brand promise.

    • Target

Just for fun- can you guess the company?

Codes of ethics

Codes of ethics

Typical content

Purpose of Code

Commitment to strong ethical standards

Description of ethics hotline

Fair dealing

Conduct in the workplace

Conflicts of Interest

Company Property and Records

Complying with the Law

Typical Content

Enforcement and effectiveness

  • Whistleblower programs

    • US Federal Protection Acts

    • Recent Amendments

  • Management view on ethical practices

    • Influencing an organizational culture

    • Broadening scope for Board of Directors?

  • Education and Training

Enforcement and Effectiveness



Stop at 4:39

Discussion survey results

Are Code of Ethics effective in ensuring an organization is ethical?

What changes would you suggest to manage a risk environment in an ethical manner?

Discussion – Survey Results


Corporate Governance. Retrieved (2009, October 31) from

Willis Group Holdings. Corporate governance. Retrieved from

Walker, David M. U.S. Government Accountability Office, (2004). Restoring trust after recent accountability failures. Retrieved from

GAP statements and explanation of whistleblower amendment in stimulus package. Retrieved from

Institute of Internal Auditors. Corporate governance: strategies for internal audit. Retrieved from

Tuschman, R., (2007). Internal Auditing. Altamonte Springs: The Institute of Internal Auditors Research Foundation

Rules of the Game: Do Corporate Codes of Ethics Work?. Retrieved (2009, November 1 ) from;jsessionid=K51bThlQ1wnJyGZ4B5vkBZRnYRppCrZ6hprjHbTGfjnhnQmf0nyn!-1366559283!2066618780?docId=5001501133




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