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CORPORATE GOVERNANCE INTERNAL CONTROL

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Table of Contents s
1.0 Introduction................................................................................................................. 3
1.1 Case 1- Corporate governance and audit......................................................... 3-5
2.0 Case 2 Audit and sole Traderships, partnership and limited liability company....... 6-7
3.0 Case 3 Professional Values, Ethics and Attitudes....................................................7-8
4.0 Conclusion.................................................................................................................... 8
5.0 Bibliography................................................................................................................. 9

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1.0 Introduction s
In this project I will be concentrating on corporate governance and audit. It will first look into
the impact of credit crunch and how corporate governance can help to reduce followed by
internal auditors and external auditors. I will also talk about the key difference between sole
trader, partnership and limited liability companies, Professional ethics and the difference
between fraud and error and responsible for the detection and prevention.
1.1 Case 1 Corporate Governance and Credit Crunch s
1) Corporate governance has always been there even before the credit crunch. It is that fact
that for corporate governance to be effective in avoiding credit crunch and other bad
situations like this all the existing companies need to follow it effectively. Corporate
governance provides a guideline on how a company should be managed and controlled and it
also emphasises on having an efficient internal control department with an Audit Committee.
Under corporate governance the Audit committee monitors all the business transaction and
stays vigilant to ensure that managers are acting in the shareholders interest. Basically most
of the bank manager over several years has been ignoring the basic principle of corporate
governance as they were making profits and used risky policies to further enhance the profit
so they can be remunerate handsomely at every subsequent year end. This cumulative
approach of short-termism from all the bank managers has resulted in ‘Credit Crunch’. (Paul
Moxey and Adrian Berendt 2008).
There is nothing one could have done to reduce the impact of Credit Crunch as it occurs due
to the past transactions over the several years. It is like a disease where prevention of
something spreading must be the key aim of the entire organisations & governments rather
than the cure. (Paul Moxey and Adrian Berendt 2008).
2) Corporate governance is a framework within which companies are directed, controlled and
held to account. It is use on a day to day basis in the management of enterprises which is a
task delegated by boards to executive management. Corporate governance has a more
strategic function: it is concerned with steering a company in a direction that is consistent
with its long-term values and objectives. Corporate governance is very important because it
helps to prevent corporate scandals, fraud and potential civil and criminal liability of the
organisation and it is also good business. The corporate governance framework is vital in
public bodies. It lets the public know that our organisation is well-managed and ensures that
the business we conduct is transparent. (Frederick Lipman and L.Keith Lipman 2009).
The credit crunch is a sudden shortage of funds for lending, leading to a resulting decline in
loans available. It can occur for varies reasons such as; sudden increase in interest rates or
direct money controls by the government etc. The recent credit crunch was driven by sharp
rise in defaults on subprime mortgages. These mortgages were mainly in America but
resulting shortage of funds spread throughout the world. (Mortgage guide UK 2008)
Main cause of credit crunch has been a fundamental failure in corporate governance. They
have ignored the key point that good corporate governance is about boards directing and

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Table of Contents s 1.0 Introduction................................................................................................................. 3 1.1 Case 1- Corporate governance and audit......................................................... 3-5 2.0 Case 2 – Audit and sole Traderships, partnership and limited liability company....... 6-7 3.0 Case 3 – Professional Values, Ethics and Attitudes....................................................7-8 4.0 Conclusion.................................................................................................................... 8 5.0 Bibliography................................................................................................................. 9 1.0 Introduction s In this project I will be concentrating on corporate governance and audit. It will first look into the impact of credit crunch and how corporate governance can help to reduce followed by internal auditors and external auditors. I will also talk about the key difference between sole trader, partnership and limited liability companies, Professional ethics and the difference between fraud and error and responsible for the detection and prevention. 1.1 Case 1 – Corporate Governance and Credit Crunch s 1) Corporate governance has always been there even before the credit crunch. It is that fact that for corporate governance to be effective in avoiding credit crunch and other bad situations l ...
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