The Control Role of Boards of Directors : Essentials on monitoring the effectiveness of internal control, internal audit, and risk management systems
Journal
Newsletter ACA Förderverein
Type
newspaper article
Date Issued
2010-11-25
Author(s)
Abstract
The board of directors is often referred to as the «top internal control
mechanism».
This article specifies the boards' control role, i.a., according to article 41 section 2 of the 8th EU Company Law Directive, stating that «[…] the audit committee shall, inter alia:
- monitor the financial reporting process;
- monitor the effectiveness of the company's internal control, internal audit where applicable, and risk management systems;
- monitor the statutory audit of the annual and consolidated accounts;
- review and monitor the independence of the statutory auditor or audit firm, and in particular the provision of additional services to the audited entity.»
It is important to note that while the 8th EU Directive assigns this oversight duty to the organization's audit committee, it remains ultimately the collegial responsibility of the entire board; as with the board's control role regarding the nontransferable and inalienable duties according to the Swiss Company Law
mechanism».
This article specifies the boards' control role, i.a., according to article 41 section 2 of the 8th EU Company Law Directive, stating that «[…] the audit committee shall, inter alia:
- monitor the financial reporting process;
- monitor the effectiveness of the company's internal control, internal audit where applicable, and risk management systems;
- monitor the statutory audit of the annual and consolidated accounts;
- review and monitor the independence of the statutory auditor or audit firm, and in particular the provision of additional services to the audited entity.»
It is important to note that while the 8th EU Directive assigns this oversight duty to the organization's audit committee, it remains ultimately the collegial responsibility of the entire board; as with the board's control role regarding the nontransferable and inalienable duties according to the Swiss Company Law
Language
English
Keywords
board
board of directors
boards of directors
audit committee
internal control
internal control mechanism
internal audit
risk management
risk management systems
8th EU Company Law Directive
EU Directive
article 41
control
control role
Swiss Company Law
monitoring
financial reporting process
statutory audit
consolidated accounts
oversight duty
HSG Classification
contribution to practical use / society
Refereed
No
Publisher
Verein zur Förderung des Instituts für Accounting, Controlling und Auditing an der Universität St. Gallen (ACA-HSG)
Number
2
Start page
13
Subject(s)
Division(s)
Eprints ID
70361