Corporate Compliance Report
Corporations must be properly equipped to meet the responsibilities for internal controls. The highly visible and competitive natures of businesses today require management to achieve proficiency in various areas. Operations must be efficient and effective, reliable financial data must be compiled, while adhering to applicable laws and regulations at all times. The Council of Sponsoring Organizations (COSO) in 1992 established a framework to guide businesses, which was subsequently expanded in 2004. â€œCOSO defines enterprise risk management as â€œa process effected by an entityâ€™s board of directors, management, and other ...view middle of the document...
Setting a proper tone involves establishment of ethical standards throughout the organization and providing a culture for facilitating an open disclosure policy. This will inspire communications and develop a atmosphere of transparency throughout the company. Additionally, acknowledging the stakeholders is necessary for promoting the right control environment. The board and executive management team can set the tone through leading by example. The mortgage and banking industry of which I have been employed in for over a decade has faced considerable media attention for the lack of ethical behavior and visible leadership insufficiencies. Angelo Mozilo, CEO of Countrywide Financial was previously praised by business magazines and honored by charitable organizations â€œis now accused of predatory lending and rapacious greedâ€ (Harris, 2008). Creation of and adherence to an ethically based internal environment with adequate accountability safeguards is a necessary to establish a company-wide tone and culture.
Top down management is affected by objective setting. Every company has (or should have) a mission statement. This provides a broad perspective or macro-view to the direction the organization is wishing to go. An important and seldom realized issue lies within the individual employee, that being a diluted or nonexistent personal mission statement. The existing job market is highly competitive; companies are seeking highly qualified and educated employees to compete in todayâ€™s global marketplace. Aligning objectives to mimic those of the companyâ€™s mission statement should be a practice enacted by the majority of employees. The typical employee views objective setting as an annual task required by his or her human resources department, with intent to impose a year-over-year comparison model. Setting objectives should become a more fluid process with the ability to review recent performances and adjust objectives based upon those experiences. Annual objective audits are clouded by time; one suggestion is to implement a discipline know as After Action Reviews (AARs). â€œAARs are a powerful tool that serves two purposes â€“ used correctly they can help us focus on our objectives but more than that they can help us learn from our day to day experiencesâ€ (Gurteen, 2000). Management teams monitoring todayâ€™s lending industry would greatly benefit from instituting â€œmini-mission statementsâ€ and after action reviews. Due to the continual changes which are both governmental and industry orchestrated, setting an atmosphere conducive to placing an emphasis upon individual objective in line with company objective will promote a greater understanding and sense of accomplishment.
The COSO framework is a process and its implementation is a means to an end, rather than the end itself. Importance lies within proper awareness of identifying events critical to the overall strategies and direction...