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Corporate governance

Governance and internal controls

7.1 Board responsibility

Board is responsible for:

 maintaining a sound system of internal control

 reviewing the effectiveness of internal controls

 reporting to shareholders that this review has been carried out.

7.2 Turnbull Report

The Turnbull Report requires that internal controls should be established using a risk-
based approach. Specifically a company should:

 establish business objectives

 identify associated key risks

 decide upon controls to address the risks

 set up a system to implement the required controls, including regular feedback

 review internal controls under the five headings identified by COSO.

Illustrations and further practice

Now try TYU 15 from Chapter 9

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