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The Essential Guide to Internal Auditing, 2nd Edition by K. H. Spencer Pickett

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Chapter 2

Corporate Governance Perspectives

Introduction

Corporate governance is a term that, over the years, has now found its way into popular literature. It has been described by Sir Adrian Cadbury as the way organizations are directed and controlled. This simple statement contains many profound elements including the performance/conformance argument of whether good governance is about complying with codes of practice or whether it also underpins better business performance. There is also some debate as to whether companies should follow a fixed set of rules or be guided by less rigid principles. An organization's main task is to achieve the level of performance that it was established for. However, at the same time, it must adhere to all relevant standards, rules, laws, regulations, policies and expectations that form a framework within which this performance will be assessed. This, in turn, may cause many difficulties in the real world. Our first reference to corporate governance comes from Ireland:

Improved standards of corporate governance, like ‘motherhood’, cannot be argued against. It is critical to a small economy like Ireland, which is seeking to develop business in the more sophisticated sectors, that we are seen to operate to high standards.1

A widely reported case, involving a large law firm, recounts the pressures placed on the legal teams who were told to charge a set number of fee paying hours each month, which resulted in the routine falsification of timesheets ...

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