Self-governance means adding policies, procedures, and controls to enforce
them to those already imposed by external parties. Self-governance helps
create a continuous feedback loop of information to improve the operations
of a company and to make sure that any important operational processes
take place as desired by the board and CEO.
One of the most important governance activities is to look at the existing set
of controls for both imposed and self-imposed governance and ensure that
they have the proper scope and effect. In performing this analysis, a company
frequently gains insights into how to redesign its processes to increase effi-
ciency and better align them to corporate goals. After new ideas for improve-
ments have been discovered, they must be implemented in order to take
effect. In other words, governance, when properly implemented, helps guide
the evolution of a company. For this reason, there is a natural link between
governance and program management.
Hitting the Audit Trail....................................................................................
Increased attention to GRC has been a boon for auditing firms as companies
have hired them to help make sure they are complying with Sarbanes-Oxley
and other regulations. Auditors have been asked to help design and imple-
ment controls and to perform other forms of testing to ensure compliance.
- Board of Directors
- Audit Committees
- Remuneration
- Process standards
- Debt covenants
- External auditors
- Government
regulations
- Industry regulation
Corporate Governance is the method by which
a corporation is directed, administered or controlled.
Corporate Governance
A lack of Corporate Governance exposes a corporation to significant
risks: among others fraud and non-adherence to regulations
Self
Governance
Imposed
Governance
Figure 1-3:
The three
kinds of
governance.
32 Part I: Governance, Risk, and Compliance Demystified
