Ic Case Study

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2.2.0 An ICS encompasses the policies, processes, tasks, behaviours and other aspects of a company that taken together; 2.2.1 Facilitate its effective and efficient operation by enabling it to respond appropriately to significant business, operational, financial, compliance and other risks to achieving the company’s objectives. This includes the safeguarding of assets from inappropriate use or from loss and fraud, and ensuring that liabilities are identified and managed; 2.2.2 Help maintenance of proper records and processes that generate a flow of timely, relevant and reliable information within and outside the organisation; 2.2.3 Facilitate compliance with applicable laws, regulations, and internal policies with respect to the conduct…show more content…
The committee is a joined initiative of five organisations which are American Accounting Association, the American Institute of Certified Public Accountants, Financial Executives International, Institute of Internal Auditors, and the Institute of Management Accountants. COSO defined internal control as a process, effected by an entity’s BOD, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance. It therefore facilitates the achievement of an entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. It is an integrated part of an organisation’s governance system and risk management used to take advantage of opportunities and counter threats. 2.3 ICS Theories The aim of ICS theories is to evaluate the arguments for ICS in order to help explain the design and adoption of internal controls. Several scholars have come up with a number of theories on ICS in organisations, some of which are as follows: 2.3.0 Modern…show more content…
This theory has been contentious but has nonetheless been applied in a wide variety of fields such as accounting, finance, marketing and organisation behaviour. At the heart of agency theory lies the distinction between ownership and control. Agency theory can be applied to the agency relationship deriving from the separation between ownership and control as shown in Figure 2.1 below. Figure 2.1 Agency Relationship. Kaplan Financial Limited (2012). The agency theory can help to explain the actions of the various interest groups in an organisation as shown in Figure 2.2 below. Figure 2.2 Actions of the Various Interest Groups in an Organisation. Kaplan Financial Limited (2012). One person, the principal, engages another person, the agent to carry out some service. An agency problem arises if the cooperative behaviour, which would maximize the group’s welfare, is not consistent with each personal’s self-interest. Because owners of resources will have less information than those who manage the resources, these agents may take advantage of the situation for their self benefit. As a result, different contracting arrangements and ICS need to be designed in order to mitigate agency-related

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