Risks Of Noncompliance In Corporate Governance

3160 words - 13 pages

Risks of Noncompliance in Corporate GovernanceMMPBL/570Risks of Noncompliance in Corporate GovernanceIntroductionCorporations such as Enron, WorldCom, and Tyco forced Congress to enact the Sarbanes-Oxley Act (SOX) because of mismanagement and fraud. This new law requires financial reporting and disclosure within corporate governance. To meet the expectation of investors, McBride Financial Services, Inc. (MFSI), must develop corporate governance and find solutions that will address any issues of noncompliance that could hurt their reputation. To create the best ...view middle of the document...

"The problem, is it often is in federal legislation, is that the detailed rules required to put those tenets into place result in cumbersome and highly bureaucratic procedures to ensure their proper implementation" (Gandossy, 2004, p.p.110).The cost of the compliance remains high and the certification requirement is diverting time and efforts of the management from running the company efficiently. The costs for auditing internal controls remains high, for instance, companies paid an average of $ 4.36 million to comply with Sarbanes-Oxley Act.Part of a well thought out strategic plan is risk management, which most organizations cannot afford to overlook. The two recommendations selected for McBride Financial Services, Inc. (MFSI), are to create internal controls and an audit committee. There are costs associated with the risks of noncompliance. MFSI will be in direct violation of SOX if Hugh McBride is persistent on having Paul T. to handle the "accounting stuff" without the oversight of auditors. The newly created board of directors should create committees with authority and oversight over internal controls processes. To reduce the risk of noncompliance of SOX and the SEC, the board of directors should create Audit Committee with authority and oversight of the accounting and financial reporting processes. An alternative to an in-house committee, MFSI could hire auditors and accounting firms and to help mitigate the financial management risk. However, initially there are associated costs but will be worth the expense for the company to remain in compliance. By not creating an audit committee, there will be no checks and balances for Hugh McBride, allowing him to remain noncompliant with the SEC and SOX. The benefits from staying in compliance through the above recommendations outweigh the costs of noncompliance.Two recommendations offered to McBride Financial Services, Inc. require diligence in compliance to reach the end state goals successfully. The first, creating a culture of ethics encompasses the recommendation to create an audit committee to govern the oversight of hiring independent directors and ensuring that McBride adheres to ethical decision making in the best interest for McBride Financial and the stakeholders. McBride chose potential directors that would follow the lead of the current CEO, allow that CEO to choose senior executive's compensation packages and make all decisions about the direction McBride Financial advances. According to the text, "Small, insular boards lack the outside perspective that is necessary in case a company finds itself in trouble". (Gandossy & Sonnenfield, 2004, p. 243) It is critical that the board established for McBride financial work in partnership with the oversight committee to stabilize the company. McBride Financial will face serious repercussions if Hugh McBride is not diverted from the current course of unethical decision- making. In the case of Enron the text states, "They were ceding far...

Other Papers Like Risks Of Noncompliance In Corporate Governance

Legality and Ethicality of Corporate Governance

1091 words - 5 pages Legality and Ethicality of Corporate Governance This paper will discuss the legality and ethicality of United Thermostatic Control’s (“United”) corporate governance. Given the fact that United is a publicly owned company, the role that the Sarbanes-Oxley Act of 2002 (“SOX”) played in this case will be examined. The discussion will cover various regulations such as the AICPA Code of Conduct, GAAP, and the ethicality of the activities that

Legality and Ethicality of Corporate Governance

974 words - 4 pages Legality and Ethicality of Corporate Governance Paper ETH/376 Legality and Ethicality of Corporate Governance Paper United Thermostatic Controls is a publicly owned company that manufactures and markets residential and commercial thermostats (Mintz & Morris, 2011). As a publicly owned company, United Thermostatic Controls common stock is listed and traded on the New York Stock Exchange. Frank Campbell is the director of the Southern

Individual Legality and Ethical of Corporate Governance

1247 words - 5 pages Week 3: Individual Legality and Ethicality of Corporate Governance Alisha J. Simental March 6, 2014 Katherine Parks Introduction In Case 3-3, we are introduced to the United Thermostatic Controls," that engages in the manufacturing and marketing of residential and commercial thermostats."(S. Mintz, R. Morris, 2011) They use their thermostats control temps in refrigerators and furnaces, mainly selling to retailers. According to the text

Corporate Governance In Banks Undergoing Merger And Acquisition

2449 words - 10 pages great significance to the bank as well as the public. This committee would also monitor bank's relationships with external constituencies and issues that influence bank's reputation (Liz Moyer, Citi Claims Major Reforms In Corporate Governance).Legal And RegulatorySenior management should know how the bank is earning its income and what risks it is undertaking during the course of conducting business. The fall of Barings Bank was primarily due to

Discuss How Observance of Good Corporate Governance and Avoidance of Corrupt Practices in an Institution Can Contribute to an Effective Organization

2049 words - 9 pages and avoidance of corrupt practices in an institution can contribute to an effective organization. INTRODUCTION Corporate governance is a topic that has received growing attention in the public in recent years as policy makers and others become more aware of the contribution good corporate governance makes to financial market stability and economic growth. Corporate governance is all about controlling your business and so is relevant, and


2499 words - 10 pages future. It is evident from the current market situation that, companies that offer more transparency and strict auditing are running with much more profitability as they have confidence of the stakeholders and also the market. Aim and Objectives This study wants firstly to elaborate in a way that how internal auditors perceive their current role in introducing and managing corporate governance within the Universities of United Arab Emirates

Role of Media in Promoting Good Governance

4031 words - 17 pages ROLE OF MEDIA IN PROMOTING GOOD GOVERNANCE Media are the storage and transmission channel or tool used to store and deliver information or data. Media are (mostly) non state actors who define themselves apart from the state and from all other societal actors (what Edmund Burke described as a “fourth estate”, distinct from government, church and electorate). While this notion of free and independent media acting on behalf of the citizen

Role of Ict in the Governance of Higher Education

3069 words - 13 pages GOVERNANCE AND QUALITY ASSURANCE Role of ICT in the governance of higher education Mrs. Shankarisankar, M.A.,MPHIL.,M.ED.,MPHIL., HDCA., DMTT ASSISTANT PROFESSOR SRM SCHOOL OF TEACHER EDUCATION AND RESEARCH SRM UNIVERSITY Abstract The increasing use of information and communication technologies (ICTs) has brought changes to teaching and learning at all levels of higher education systems (HES). Across the past twenty years the use of ICT

The Function and Governance of Imf Lending Policies in Malawi

1537 words - 7 pages The Function and Governance of IMF Lending Policies in Malawi The International Monetary Fund was established at the United Nations Conference held in Bretton Woods, New Hampshire, United States in July, 1994. The IMF's goal is to build a framework of cooperation between nations into hasten up post-war reconstruction, to aid political stability, and to encourage peace (Lele 154). The IMF membership is at 188 countries. According to the

The Role of Federal Regulations in Corporate America

2823 words - 12 pages , greed, cover-ups, and bail-outs are some of the things that come to mind when we talk about the America's financial economy. Are all the hundreds of pages of regulations laid down by the government working in America's favor or is it just another way for the CEOs and the executives for fortune 500 companies to manipulate the system and its people? The corporate governance system started with the corporate debacles and the ultimate crash of the

The Value Of Team Diversity In The Corporate World

4816 words - 20 pages .Kotter, J. P. (1996) Leading Change. Boston, MA, Harvard Business School PressNankervis, A.R., Compton, R.L. & McCarthy, T.E. (1993) Strategic Human Resource Management, Thomas Nelson, Australia.Nicholas, S. & Semmartino, A. (2000), Corporate Awareness of Diversity in the Australian Workplace: The mind of the CEO, Melbourne, Australian Centre for International BusinessParker, S.K. (2001) "Unleash the power of your workforce"; AGSM Magazine

Related Essays

Corporate Governance In Soccer Essay

3895 words - 16 pages Corporate Governance in Soccer Name: Institution: Words: 2 917 Executive Summary Corporate governance involves the mechanism through which a corporate organisation or firm is directed and controlled. Some of the advantages of enhancing corporate governance include the promotion of democracy, linking the club to the community that forms the major stakeholder, establishing stability and confidence, improving relationships with

Corporate Governance In China Essay

3208 words - 13 pages :59 Page 169 __________________________________________________ CHINA ᔡ 169 6.2.1 Distinctive Features of Chinese Corporate Governance Corporate governance practices in many countries have displayed some convergence towards Western standards in recent years (often emulating Britain’s 1992 Cadbury Code and the United States’ 2003 Sarbanes–Oxley Act), but countries generally retain a set of distinct practices. In building its own

Customer Relationship And Corporate Governance In Sustainability Of Business

2666 words - 11 pages commensurate with the risks involved. Corporate governance is a key element in improving organisational performance and sustainability as well as enhancing stakeholder confidence. In contemporary business corporations, the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and

The Literature Of Corporate Governance Principles 2

3738 words - 15 pages investments. Although this event has started the change in the Cypriots’ view of the Corporate Governance Principles, many companies don’t take the principles seriously, and the full benefits of these principles are not received. Problem Statement: Corporate Governance is a set of rules a company should follow and is the key to the reliability of corporations, financial institutions and markets, maintains the stability of the economies. (OECD