BU486 Chapter Notes - Chapter 7a: Financial Accounting Standards Board, Electronic Data Interchange, Risk Appetite
Document Summary
Internal environment: the company culture that is the foundation for all other erm components as it influences how organizations establish strategies and objectives, structure business activities and identify, assess and respond to risk. Enron (ineffective internal environment that resulted in financial. Ma(cid:374)age(cid:373)e(cid:374)t"s philosoph(cid:455), operating style and risk appetite failure. Risk appetite: the amount of risk a company is willing to accept to achieve its goal and objectives. To avoid undue risk, risk appetite must be in alignment with company strategy: ex. Ma(cid:374)age(cid:373)e(cid:374)t"s loose attitude (cid:272)a(cid:374) (cid:272)o(cid:374)tri(cid:271)ute to the purchasing depart(cid:373)e(cid:374)t"s i(cid:374)atte(cid:374)ti(cid:448)e(cid:374)ess to good i(cid:374)ter(cid:374)al (cid:272)o(cid:374)trol pra(cid:272)ti(cid:272)es. Integrity: starts at the top, as company employees adopt top management attitudes about risks and controls. Sox requires public companies to have an audit committee: the outside independent bod members responsible for financial reporting, internal control and hiring and overseeing internal and external auditors.
