...Background and Overview CITIC Pacific (CP) is the Hong Kong arm of the CITIC group, China’s largest state-owned investment company. It is publicly traded on the “Hong Kong Stock Exchange”(HKEx). CP’s major businesses are special steel manufacturing, mining of iron ore and property development in mainland China. For the year ending 31 December 2007, Citic Pacific showed a record net profit of about US$1.5 billion, representing a growth of almost 33% over the previous year. However, in 2008, CITIC Pacific’s stock price plunged by 90% within a several months after a foreign exchange scandal that led to a loss of some US$2 billion. This loss was attributed to the unauthorized betting on foreign exchange derivative contracts that were supposedly hedges against currency risks. Details Analysis Timeline On the 20th October 2008, CP announced suddenly that it would lose as much as US$2 billion. Within a day, its share price plunged 55.1% to HK$6.52, and the loss is likely to mount up. Then, two leaders resigned and a new Finance Director was appointed immediately. After that, within two days of the announcement of the potential losses, the Securities and Futures Commission announced that it would be investigating CP. Criticism And this sudden event also caused many queries from the public, one outstanding question was asking for the BOD, people wanted to know why CP company delayed for about six weeks before making the potential losses...
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...corporate governance? • Transparency: Are the board telling us what is going on? • Accountability: Is the board taking responsibility? • Corporate Control: Is the board doing the right thing? 2. What mechanisms are suggested by the ASX corporate Governance Council? Relating to the three principles stated in the last question. The ASX Corporate Governance Council translates the elements into mechanisms: • Is the board telling us what is going on? →forming an environment to take risk. • Is the board taking responsibility? →clarifying the role of the board and management. • Is the board doing the right thing? →Meeting information needs of investment communities. 3. What is an SME? SME stands for Small and Medium Enterprises. 4. What processes would you expect to find in a company relating to risk management and compliance processes? • Policy/framework • Board commitment, oversight and review • Accountability • Risk processes: o Risk identification o Risk assessment/measurement o Risk response • Robust appropriate internal control and statutory and regulatory compliance...
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...Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright. Abstract Auditors are trained to make detailed examinations of the internal control systems such as ISO 9001, ISO 29001, ISO 14001, OSHAS 18001, API, accounting systems and various legislative requirements and; focus their audit planning, testing, and reporting on internal controls in the business process. The Evaluation of controls without first examining the purpose of the business process and its risks provides no context for the results. How can the internal auditor know which control systems are most important, which are out of proportion to their risk, and which are missing? When controls are the central theme of the internal audit, audit reports and recommendations are generated for improving and strengthening internal controls. Over time, layer upon layer of controls are built up. These excessive layers of control...
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...Roles of audit committee An Audit Committee does not focus solely on internal audit activities or on financial issues. Recent trends are for it to take on broader roles and responsibilities. The establishment of an Audit Committee affords the opportunity to set aside time to focus on governance, risk and control issues. The key responsibilities of an Audit Committee include: overseeing the risk management framework and processes; reviewing compliance related matters and internal controls; overseeing the relationship, appointment and work of the external and internal auditors; and reviewing the annual financial statements and recommending them for governing body approval. As it relates to oversight of the internal audit function, the responsibilities of Committee’s include: ensuring that internal audit activity is structured to achieve organisational independence; ensuring the internal audit charter permits full and unrestricted access to top management, the Audit Committee and the governing body; ensuring unrestricted access by internal auditors to records, personnel, and physical properties; ensuring the function is appropriately resourced; and ensuring the function is operating effectively. In relation to its other roles, Audit Committee responsibilities could include: review, with management, the adequacy of policies and practices for risk management and the operation of the internal control system; review, with management, the adequacy...
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...Global Technology Audit Guide Auditing IT Governance Global Technology Audit Guide (GTAG®) 17 Auditing IT Governance July 2012 GTAG — Table of Contents Executive Summary......................................................................................................................................... 1 1. Introduction................................................................................................................................................ 2 2. IT Governance Risks................................................................................................................................... 7 3. Aligning the Organization and IT — Key Considerations................................................................ 12 4. The Role of Internal Audit in IT Governance............................................................................ 15 Conclusion....................................................................................................................................................... 18 Authors and Reviewers.............................................................................................................................. 18 Appendix — IT Governance Risk Assessment/Engagement Planning Considerations............................................. 19 iv GTAG — Executive Summary Executive Summary To support the heightened importance of IT governance and the mandatory nature of the International Standards for the Professional...
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...Clause 49 of Listing Agreement The company agrees to comply with the following provisions: I. Board of Directors (A) Composition of Board i. The Board of directors of the company shall have an optimum combination of executive and non-executive directors with not less than fifty percent of the board of directors comprising of non-executive directors. ii. Where the Chairman of the Board is a non-executive director, at least one-third of the Board should comprise of independent directors and in case he is an executive director, at least half of the Board should comprise of independent directors. Provided that where the non-executive Chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the company shall consist of independent directors. Explanation-For the purpose of the expression “related to any promoter” referred to in sub-clause (ii): a. If the promoter is a listed entity, its directors other than the independent directors, its employees or its nominees shall be deemed to be related to it; b. If the promoter is an unlisted entity, its directors, its employees or its nominees shall be deemed to be related to it.” iii. For the purpose of the sub-clause (ii), the expression ‘independent director’ shall mean a non-executive director of the company who: a. apart from receiving...
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...Global Technology Audit Guide Auditing IT Governance Global Technology Audit Guide (GTAG®) 17 Auditing IT Governance July 2012 GTAG — Table of Contents Executive Summary......................................................................................................................................... 1 1. Introduction................................................................................................................................................ 2 2. IT Governance Risks................................................................................................................................... 7 3. Aligning the Organization and IT — Key Considerations................................................................ 12 4. The Role of Internal Audit in IT Governance............................................................................ 15 Conclusion....................................................................................................................................................... 18 Authors and Reviewers.............................................................................................................................. 18 Appendix — IT Governance Risk Assessment/Engagement Planning Considerations............................................. 19 iv GTAG — Executive Summary Executive Summary To support the heightened importance of IT governance and the mandatory nature of the International Standards...
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...Table of Contents 1.0 Introduction 1 2.0 Discussions 3 2.1 Leadership and Culture 5 2.2 Internal Control 8 2.3 Internal Audit 13 2.4 External Audit 16 2.5 Board of Director (BOD) 19 3.0 Conclusion 21 4.0 Biliography 22 1.0 Introduction WorldCom is a profit organization that specialized in local, long distance and international plans, high cable internet, prepaid cards, and provided telecommunications to customers nationwide with business corporations making up the majority of the 20 million customers they served. LDDS began operations in 1984 offering services to local retail and commercial customers in the southern states. It was initially a loss making enterprise, and thus hired Bernie J. (Bernie) Ebbers to run things. It took him less than a year to make the company profitable. By the end of 1993, LDDS was the fourth largest long distance carrier in the United States. After a shareholder vote in May 1995, the company officially came to be known as WorldCom. WorldCom primary business goal was to achieve long term revenue-growth by maintaining the achievement of E/R ratio. However, the industry began to deteriorate in 2000 due to economic recession and other reasons, such as overcapacity and heightened competition. Despite the falling in revenue, the management of WorldCom tend to manipulate the accounting entries by accrual releases and capitalization of line cost in order to achieve the targeted performance. The scheme lowered line costs (the company’s largest single...
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...Satyam Case Study The Satyam scandal is a case that details carelessness of fiduciary duties, total collapse of ethical standards, and a lack of corporate social responsibility. The corporate governance mechanisms at Satyam ultimately led to the downfall of the company. Two words can clearly explain this scam: greed and desire. The CEO of Satyam, Ramlinga Raju, exhibited greed that overshadowed the responsibility to meet fiduciary duties. To compound the issue, vital information was withheld from employees. Even if regulatory changes were implemented, the Raju brothers would have still committed this scam. 1. Raju felt the need to inflate numbers on the balance sheet to impress stakeholders, investors, analysts, and the stock market. The first sign of fraudulent activity began in April 1999, when the company stated that the company experienced a double-digit annual growth rate. The fraud became very prevalent when Satyam planned to acquire stake in Maytas Infrastructure Limited and in Maytas Properties. Ironically, both of these companies were real-estate firms that were owned by family members of Satyam’s founder. I inferred that Raju wanted to acquire these two firms on the balance sheet in order exaggerate their worth. On December 16th, 2008, the Satyam board, including five independent directors approved the proposal to buy stake in Maytas Infrastructure and Maytas Properties without any shareholder approval. Here lies another major problem. There were 5 independent...
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...Casualty Actuarial Society Committee on Enterprise Risk Management has adopted the following definition which includes the purpose of ERM : “ERM is the discipline by which an organization in any industry assesses, controls, exploits, finances, and monitors risks from all sources for the purpose of increasing the organization’s short – and long-term value to its stakeholders.” In the US, COSO published its ERM-Integrated framework in 2004. COSO identified a need for robust framework to help companies effectively identify, assess, and manage risk. The resulting framework has eight components and four objectives. The eight components are:- * Internal Environment- It encompasses the tone of an organization, and sets the basis for how risk and control are viewed and addressed by an entity’s people. * Objective setting –Objectives must be aligned with the organization’s risk appetite, which derives risk tolerance levels for the organization. * Event identification-Management identifies potential events that, if they occur, will affect the entity’s ability to successfully implement the strategy and achieve objectives adversely or positively. * Risk Assessment-It allows an entity to consider the extent to which potential events have an impact on achievement of objectives. * Risk response-It includes risk avoidance, reduction, sharing and acceptance. * Control Activities-These are the policies & procedures that help ensure the management’s risk responses...
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...CONTROL TECHNIQUES 1. INTRODUCTION The assignment requires critically analyzing one of the key aspects of managerial organization and making suggestions to improve the current status of the selected organization. Out of the four areas I chose control techniques for this assignment. Management controls have always existed, in order to control the behavior of employees with the purpose of ensuring that organisational objectives are achieved. Many of these controls were accounting controls, such as budgets, standard costs, variance analysis etc. As organisations became more sophisticated, non financial controls were added. These controls included targets such as quality, waste, delivery lead-time, customer satisfaction etc. When other controls, such as those in respect of personnel, information systems, corporate policies, working practices etc. are added, the result is a system of management control, although often the components of the system lead to different behaviors. In his seminal work on the subject, Anthony (1965) defined management control as: “The process by which managers assume that resources are obtained and used effectively and efficiently in the accomplishment of the organisation’s objectives” His classic categorization of control was of three levels; strategic, management and operational which he saw as linked. In his work, management control was seen as the interface between strategic planning and operational control such that management control...
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...Republic of the Philippines SECURITIES AND EXCHANGE COMMISSION SEC Building, EDSA, Greenhills Mandaluyong City SEC Memorandum Circular No. 6 Series of 2009 REVISED CODE OF CORPORATE GOVERNANCE Pursuant to its mandate under the Securities Regulation Code and the Corporation Code, the Securities and Exchange Commission (the “Commission”), in a meeting held on June 18, 2009, approved the promulgation of this Revised Code of Corporate Governance (the “Code”) which shall apply to registered corporations and to branches or subsidiaries of foreign corporations operating in the Philippines that (a) sell equity and/or debt securities to the public that are required to be registered with the Commission, or (b) have assets in excess of Fifty Million Pesos and at least two hundred (200) stockholders who own at least one hundred (100) shares each of equity securities, or (c) whose equity securities are listed on an Exchange; or (d) are grantees of secondary licenses from the Commission. Article 1: Definition of Terms a) Corporate Governance – the framework of rules, systems and processes in the corporation that governs the performance by the Board of Directors and Management of their respective duties and responsibilities to the stockholders; b) Board of Directors – the governing body elected by the stockholders that exercises the corporate powers of a corporation, conducts all its business and controls its properties; c) Exchange – an organized market place or facility that brings...
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...ACG 3401 Study Guide Exam 1 Accountants Roles * Management accountant * Internal auditor * Information systems auditor * External auitor * Tax accountant * Fraud examiner * Managerial Accountant * Provides info for mngmt decisions * Knowledge base: * * * * Business processes * Accounting information sustems * Internal controls * Managerial accouting techniques * Impact of accounting on behaviors Advocate for best info possible for making the best decision for the firm IMA Information criteria: 1. 2. 3. 4. Forward looking 5. Timely 6. Responsibility oriented Planning Systems (budgets) control systems (implement the course of action and evaluate) Management accounting answers questions related to : * * * * * Important customers ( profitability) * Substitute products * Critical capability * Funding ( growth) Value ( Adam Smith) * Value in use- derive value by using the product * Value in exchange- derive value from the exchange of that product for another good or service. Generic Value Chain Model: 1. 2. 3. 4. *Customer need identitified* 5. Identify the market and create the product/ service ( innovation cycle) 6. Build the product or service and deliver the product or service ( operations cycle) 7. Service the customer ( post sales service cycle) ...
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...Building an Effective Internal IT Audit Function (While this topic is written from an internal auditor's perspective, the concepts and philosophies can be adapted to guide the external audit function as well) AUDIT DEPARTMENT PURPOSE Why does the internal audit department exist? What's the end goal? * Is our purpose to issue reports? * To raise issues? * To make people look bad? * To show how smart we are and how dishonest, incompetent, and corrupt the rest of the company is? * To flex our muscles and show that we can do anything and tell on anyone because we report to the board of directors? AUDIT DEPARTMENTS * formed by the company's audit committee (a subset of the board of directors) * for the purpose of providing them with independent assurance that internal controls are in place and functioning effectively. The audit committee wants a group that it can trust to be objective enough to tell it if there is anything the committee should be worried about. What's "really going on" in the company. The committee wants someone it can trust to turn in all the evildoers in the company who refuse to implement internal controls. Internal audit departments usually report directly to the chairman of the audit committee, so they feel protected from blowing the whistle on the hordes of dishonest managers who surely have infested the company. The real mission of the internal audit department is to help improve the state of internal controls at the company. Admittedly...
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...THE IMPACT OF INTERNAL AUDIT ROLE ON RISK MANAGEMENT IN UAE PHD proposal Presented to (Dr Puah Chin Hong) Faculty of Economics and Business University of Malaysia Sarawak Presented By Muhammad Usman Research Proposal for PHD Admission: Presented By Muhammad Usman Page 1 TABLE OF CONTENTS 1.0 2.0 INTRODUCTION BACKGROUND 2.1 2.2 2.3 2.4 3.0 4.0 A brief history of internal auditing The role of the internal auditor Role of the risk management function The internal auditor and the risk management process PROBLEM STATEMENT RESEARCH OBJECTIVES 4.1 Specific Research Questions 5.0 6.0 7.0 8.0 9.0 IMPORTANCE OF STUDY SCOPE OF STUDY RESEARCH DESIGN THE LITERATURE REVIEW DATA COLLECTION & SAMPLING 9.1 9.2 Survey by questionnaire and interviews Sample selection 10.0 11.0 DATA ANALYSIS REFERENCES Research Proposal for PHD Admission: Presented By Muhammad Usman Page 2 1.0 INTRODUCTION The audit function has been performed at least since the fifteenth century. However internal auditing has developed most rapidly throughout the twentieth century as a core tool of risk assessment. Today, in businesses worldwide, the internal audit function is becoming very important for achieving the objectives of organizations. In recent years, UAE market has recognized the importance of the internal audit function, which is why that function has been established in some public as well as private companies. These companies setup audit functions to deal with the assessment...
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