CEO and Head of the Audit Committee of the Board of Directors Essay

This memo is in response to your request concerning how to establish the appropriate tone. The purposes of this memo are, first, to explain the meaning and significance of evaluating control environment; second, to discuss the integrity and ethical values; third, to show the organizational structure; fourth, the importance of establishing commitment to competence; finally, to establish and segregate the division of responsibilities of finance and accounting department in order to establish the appropriate tone. Control Environment Control environment is the step engaged by a company to prevent fraud; both misappropriation of assets and fraudulent financial reporting. It has an equal role in assuring control over manufacturing and other processes. As a result of fraudulent financial reporting, the objective of accounting company is to study the causal factors that are associated with fraudulent reporting and to make recommendation to reduce its incidence. COSO emphasizes that internal control is a process to an end, and not an end in and of itself. The process is effected by individuals, not merely policy manuals, documents, and forms. By including the concept of reasonable assurance which recognizes that the cost of a company’s internal control should not exceed the benefits expected to be obtained. The control environment sets the tone of the company by influencing the control awareness of individual. It may be viewed as the foundation for the other components of internal control. The effectiveness of internal control depends on the integrity and ethical values of the personnel who are responsible for creating, administrating, and monitoring controls. Integrity and Ethical Values Integrity and ethical values are very importan... ...cide what skills are required to appropriately perform job responsibilities. Second, it must staff those jobs with individuals who have the needed skills. Trade-offs can be made in fulfilling these step, such as placing a less experience person in a demanding job and providing that person with extra supervision. Develop a matrix management in other to share authority. Delegate authorities in other to accomplish the organization’s goals, and make sure that people who are making decisions understand that they will be responsible. Works Cited Auditing & Assurances Services by Messier 9th edition 2 (COSO Internal control Framework, Executive Summary) 3 http://www.isaca.org/Journal/Past-Issues/2009/Volume-3/Pages/Tone-at-the-Top-Is-Vital1.aspx 4 http://www.coso.org/documents/990025P_Executive_Summary_final_may20_e.pdf 5 www.journalofaccountancy.com †º May 2004‎