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BUS 223
Chapter Ten Key Terms
| Term | Definition |
|---|---|
| Corporate Governance | The structure by which corporations are managed, directed, and controlled toward the objectives of fairness, accountability, and transparency. The structure generally will determine the relationship between board of directors, shareholders, and management |
| Enron Corporation | Huge American company discovered to have been involved in one of the largest instances of accounting fraud in history. |
| Gatekeepers | Some professions, such as accountants, that act as watchdogs in that their role is to ensure that those who enter into the marketplace are playing by the rules and conforming to the conditions that ensure fair market functions |
| Conflict of interest | A person holds a position of trust that requires that she or he exercise judgement on behalf of others, where his/her personal interests and or obligations conflict with those others. |
| Fiduciary Duties | A legal duty to act on behalf of or in the interests of another |
| Sarbanes-Oxley Act | An act implemented by the SEC to regulate financial reporting and auditing of publicly traded companies in the United States. |
| (COSO) Committee of Sponsoring Organizations | Voluntary collaboration designed to improve financial reporting through a combination of controls and governance standards called the Internal Control Integrated Framework. |
| Control environment | Similar to the culture of an organization, it supports people in the achievement of the organization's objectives. It also sets the tone of an organization, influencing the control consciousness of its people. |
| Internal Control | A process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in compliance, reliability, effectiveness and efficiency |
| Duty of care | Involves the exercise of reasonable care by a board member to ensure that the corporate executives with whom she or he works carry out their management responsibilities and comply with the law in the best interests of the corporation |
| Duty of good faith | Requires obedience, compelling board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization |
| Duty of loyalty | Requires faithfulness; a board member must give undivided allegiance when making decision affecting the organization. This means that conflicts of interest are always to be resolved in favour of the corporation. |
| Insider trading | Trading of securities by those who hold private inside information that would materially impact the value of the stock and that allows them to benefit from buying or selling stock. |
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