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For successful functioning of a business it would be very important to understand the role of auditing as it is one of the fundamental aspects for a successful execution of the business and assists an organization to deal with the outside world with specific information on its business and being answerable for related issues. Furthermore, it is widely recognized that any commercial entity regardless of its nature of business must supply appropriate paperwork to the government and other legitimate bodies when it comes the matter of their profit and loss to meet up with the regulations and rules on taxation. Early on, the function of audit was primarily connected with simply the issues of financial within the business that is accounted for in the business. Seemingly, the earnings produced from the activities of a company as well as the expenditures involved would be significant contributing factors with regard to making decisions about the taxes and the benefit of the shareholders. Alongside, the increased integration of IT functions in the business and build-up of its awareness in public has furthermore become more intense auditing demand which will handle accountability issues of activities of that particular business.
All business organizations these days are not complete without having an information technology department which is an integral part of it as the passage of information is a critical activity of that business. That is the reason why it brings the need of audit of such critical information and IT structured activities which involve handling of financial information such as revenue and expenses. IT Audit is going to be the main focal point in this report which will relate corporate governance in the United Kingdom business organization. A company and external world are joined by a link called corporate governance which deals in financial information and performance of that organization.
In addition to that, what is a crucial point in all this IT business and its auditing to give true and fair view to stakeholders is that auditing not only gives assurance to stakeholders but also advantage economic balance in the commercial marketplace and also the whole nation. The more critical analysis with detail research will be carried out on Information Technology audit with regard to corporate governance in UK. The report is going to put light on different areas relate to achieving success through IT audit as part of corporate governance and critically analyses the Sarbanes Oxley Act on IT audit and information transparency.
Aim and Objectives
The aim of this dissertation is to critically evaluate the effectiveness of Information Technology auditing in the context of corporate governance among the United Kingdom commercial entities. This can be done by means of taking on the research upon the following objectives.
• To considerably look at the concept of corporate governance and its importance to an enterprise both internally also externally
• To assess the vital characteristics of business information and its growth in the context of corporate governance.
• To evaluate the financial reporting scams in context of a corporate business and the function of IT in such cases by means of significantly studying cases from all different industries.
• To significantly review Sarbanes Oxley Act and its Section 404 that is the finalized rule of the act to be put in place by corporate organizations in United Kingdom.
• To analyze case study of energy sector as well as banking sector in the United Kingdom and putting Sarbanes Oxley application.
It is an established fact that a vital role is played by information in any context of a commercial entity. In the 21st Century as contended in the year 2004 by Efraim Turban et al that the Information Technology role has changed big time from a supporting part to a whole business strategic element. In addition to that, WorldCom and ENRON cases frauds were basically IT frauds that caused the financial losses to the respective organizations. Consequently, this research report is being carried out so that more light could come on the issues that Information Technology is one of the critical nature areas of any business. As stated by many experts that banking and energy sectors ( including gas and electricity ) are sectors of business which are substantially known and interact with common public on day to day basis. Except all this, stakeholders had a major concern regarding their business activities to see true and fair view of it.
What role information Technology might execute for improvement of corporate governance as well as improve visibility within large organizations. Is it possible for Information Technology to a help prevent errors and fraud.
In the year 2001, Gerry Johnson and Kevan Scholes stated that it is important part of any commercial entity primarily for the reason that corporate governance is a message communicated by an organization to outside environment which includes stakeholders and general public.
Alongside, it is interesting as well to see that corporate governance is a type of communicator which communicates to not just the world externally but also supply a one-stop information reference to anybody who is curious in the activities of an organization One more interesting aspect of corporate governance is to note that it not only communicates to the outside worlds but at the other hand also brings potential customer in the overall general public both for the organization as well as recognize potential shareholders to the organization. In addition, the fact that corporate governance is also the thorough research into the whole organization efficiency by taking the initial chapter of each and every corporation's annual report causes it to become crucial for a business in order to successfully achieve as well as maintain corporate governance at highest level as it was argued in the year 2002 by Gerry Johnson and Kevan Scholes.
In the year 2005, Chris brown comments that the role of corporate governance is very important for not just raising the efficiency of an entity however it is also a very uplifting component for the staff working in the organization to accomplish performance of a greater degree. Moreover, if it is observed that corporate governance is a crucial element which should be present in a company to manage the top management level for not only keeping a check on them but also to deploy revenue for the development of business. It is crucial that corporate governance has a heart in form of finances primarily for the reason that performance of a company is concluded on how the performance goes financially. Furthermore, in the year 2003 T. C Melewar states that corporate governance of the entity is very important for determining the possible concerns but also the efficient management of the company.
After Enron and WorldCom went down, it was found out that their down fall was the reason of poor management of company to supply Following the fall of the Enron and WorldCom which was mainly because of the failure of the management of the company to provide coherent information for audit process and fraud activities in the financial information,
USA Security and Exchange Commission have made it compulsory that non-executive directors should form a part of corporate governance. Moreover, the commission has also made obligatory rules that audit committee should comprise of at least three non-executive directors primarily to aid the approval and approval of the results from the audit committee. As stated in 2002 by Legal and Regulatory exchange of United Kingdom that it's not to be expected by non-executive directors to satisfy all expectations. However, their job is to assist a company to carry out its business and activities by providing useful assistance to BOD (Board of Directors) by giving suggestions.
The secondary information sources are only used in this research reports. The main reason behind this is that viewpoint of people is not relevant on the subject of IT auditing. Moreover, commercial entities cannot make their company's confidential information public which is prohibited by privacy and data protection issues, the only information which is accessible to public is the one that appears on the pages of company's annual report. Therefore, in the case study purposed research analysis is completely of qualitative nature, for example, the research is based upon the journals and white papers published rather than using first had data for quantifying the analysis.
• Introduction to the Company
• Research Methodology
• Analysis of the literature review
• Case Studies
• Conclusion and Recommendation
Schedule of Work
After mentioning this in research methodology, the collection of data will be done via primary sources such as (questionnaire and secondary source (literature review).
Initially I will emphasis on the current mechanism of working of the company. What strategies they are using and what their primary objective or purposes then in the second step I will study the literature review to understand the current trends and the ways through which the target market audience can be covered. Then I will analyze the finding and on the basis of findings conclusion and recommendation will be made.
To complete this project it is estimated that it is going to take ten to eight weeks.