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Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Board responsibility for internal control and risk management,by,Kiattisak Jelatianranat,Chairman, The Institute of Internal Auditors of Thailand,Director, PricewaterhouseCoopers,Kiattisak Jelatianranat,1,pwc,2nd Asian Roundtable on Corporate Governance,Responsibility VS Accountability,Responsibility What, and Who will do ?,Accountability How, and For whom ?,.,Both need independence and objectivity,Kiattisak Jelatianranat,pwc,2,31 May 2000,2nd Asian Roundtable on Corporate Governance,Balanced Scorecard in Corporate Governance,pwc,Financial & non-financial information.,Equitable Treatment of stakeholders.,Combination of Lagging and Leading Information.,Alignment of short-term objectives,3,31 May 2000,2nd Asian Roundtable on Corporate Governance,Balanced Responsibility legal & moral,pwc,Create strategic vision,Select CEO & Senior management,Establish strategic, accountable information,Independent, objective and competent oversight of day-to-day operations,Board “core” responsibilities.,Kiattisak Jelatianranat,4,31 May 2000,2nd Asian Roundtable on Corporate Governance,Board Effectiveness,pwc,Corporate governance framework,Risk management system,Internal control system,Auditing,x,Board initiative & Ownership of :,x,Selection of CEO & senior management,x,Oversight of CEO & senior management to establish,Accounting system,MIS,Compliance program,Operating systems,Kiattisak Jelatianranat,5,31 May 2000,2nd Asian Roundtable on Corporate Governance,Why corporate governance matters ?,pwc,Effective governance, and,Proper communication with your stakeholders,Sustainable Growth,Pleasant Working Environment,Substance,Form,Spirit,Kiattisak Jelatianranat,6,31 May 2000,2nd Asian Roundtable on Corporate Governance,Searching for the upside of risk management,pwc,Value Chain VS Risk,Opportunity,Uncertainty,Harzard,Risk is any issue which could impact your ability to meet your objectives,base-line,Enhancement,Preservation,Prevention,Kiattisak Jelatianranat,7,31 May 2000,2nd Asian Roundtable on Corporate Governance,Risk .,pwc,Risk Assessment,- Identify,- Measure,- Prioritize,Risk Management,- Assess adequacy of existing controls,- Develop a control improvement plan,- Create a continuous program for objectives, risk and control,assessment,Kiattisak Jelatianranat,8,31 May 2000,2nd Asian Roundtable on Corporate Governance,Risk Management Action Options,pwc,Kiattisak Jelatianranat,9,31 May 2000,2nd Asian Roundtable on Corporate Governance,Options,Fix Controls,Re-Engineer Process,Trainings,Transfer Risk (Insurance),Outsource the Function,Do nothing-Bet,Well-controlled Organizations,pwc,Key attributes of a well-controlled organization include :,# 1. Leadership of Board,# 2. Translation of strategic vision to day-to-day management,# 3. Communication of objectives & values to all levels,# 4. Individual accountability,# 5. Risk management system,# 6. Human resources reinforcement,# 7. Independent, objective and competent oversight,Kiattisak Jelatianranat,10,31 May 2000,2nd Asian Roundtable on Corporate Governance,Risk & Control : The twin systems,pwc,Define strategic risk,Articulate risk philosophy,Define values and behavioral expectations,Assess risk,Manage risk,Assess existing controls,Select control model,Continuous communication,Continuous program for ORC,Develop a control improvement plan, Operations are dynamic and evolving.,Communications & Audit,Alignment,Control,Risk,Objective,Kiattisak Jelatianranat,11,31 May 2000,2nd Asian Roundtable on Corporate Governance,Complexity of Value chain.,pwc,A board must have the capability to respond to and manage changes.,“Risk Management” and “Business Control” are the first thing for any board consideration.,Kiattisak Jelatianranat,12,31 May 2000,2nd Asian Roundtable on Corporate Governance,Internal Control Learned in Real World,pwc,Focus on “Soft Control” in assessing all of,COSOs,“Five Components” and “Three Objectives”.,Soft Controls are subjective in nature, thus self-assessment is,crucial for success.,Implementation as an integral cultural change.,Internal Control training is a “must”.,Tailor practices to an organization to assure the surpassing,expected benefits from the implementation.,Kiattisak Jelatianranat,13,31 May 2000,2nd Asian Roundtable on Corporate Governance,COSOs Internal Control Definition,pwc,is a,process, effected by an entitys,people,(board of directors, management, and other personnel), designed to provide,reasonable assurance,regarding the achievement of,objectives,in the following categories :,Effectiveness and efficiency of operations,Reliability of financial reporting,Compliance with applicable laws and regulations,Kiattisak Jelatianranat,14,31 May 2000,2nd Asian Roundtable on Corporate Governance,Control Reality,pwc,Focus on,people,and,process, not merely policy manuals,and forms,Require dynamic and interactive evaluation techniques.,Verifying compliance with policies and procedures is,not sufficient,Kiattisak Jelatianranat,15,31 May 2000,2nd Asian Roundtable on Corporate Governance,Five Components of COSOs Control Framework,pwc,Kiattisak Jelatianranat,Control Environment: The Foundation on which everything rests.,Risk Assessment: Aware of and deal with the risks it faces.,Control Activities: Actions identified by management as necessary to address risks to,achievement of objectives.,Information & Communication: People to capture and exchange the,information needed to conduct, manage and control operations.,Monitoring: React dynamically, changing as condition warrant.,16,31 May 2000,2nd Asian Roundtable on Corporate Governance,From Backroom To Board Room,pwc,Kiattisak Jelatianranat,Organizations in the 21st Century must move internal control,issues from their “,Backroom,” (Operating Level) to “,Board,Room,” (the strategic level),17,31 May 2000,2nd Asian Roundtable on Corporate Governance,Internal Audit Paradigm Shift,pwc,Kiattisak Jelatianranat,Today internal auditors are management,partners,and,consultants,to add values to the organization.,. No longer as a watch dog or a policeman,18,31 May 2000,2nd Asian Roundtable on Corporate Governance,Internal Auditing Definition,pwc,Kiattisak Jelatianranat,1999 Definition :,Internal auditing is an independent, objective,assurance,and,consulting,activity designed to,add value,and improve an organizations operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to,evaluate,and,improve,the effectiveness of risk management, control and governance processes.,Traditional Definition :,Internal auditing is an,independent appraisal function,established within an organization to,examine,and,evaluate,its objectives as a service to the organization. The objective of internal auditing is to,assist,members of the organization in the effective discharge of their responsibilities. To this end, internal auditing furnishes them with analyses, appraisals, recommendations, counsel, and information concerning the activities reviewed. The audit objective includes,promoting,effective,control,at reasonable cost.,19,31 May 2000,2nd Asian Roundtable on Corporate Governance,There is no alternative,pwc,Kiattisak Jelatianranat,Toward the new millennium environment :,Board of Directors and senior management have no,alternative not to be the leadership and ownership of systems,of risk management and internal control,20,31 May 2000,2nd Asian Roundtable on Corporate Governance,
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