Corporate Governance Best Practices for Financial Management

©April 2004, 16 pages

Underlying the recent corporate scandals is a recurring theme: An individual or a small group of senior level executives consolidated power, secretly engaged in dishonest activities and manipulated or intimidated others. Stakeholders in the corporate governance process could be proactive to protect the company against abusive situations. This can be accomplished through greater general awareness of the roles and responsibilities in the governance process, notably, how each key participant—the board, board committees, senior management and internal and external auditors can contribute to achieving an organization’s goals. Based on six group conference calls with members of Financial Executives International and the Institute of Internal Auditors, this study examines the contribution of financial management. The study's intends to further the understanding of financial executives roles and responsibilities in the corporate governance process. Finally, this study intends to increase the awareness of the other key participants in the corporate governance process of both the responsibilities of financial management and the need to insure that financial management satisfactorily addresses its responsibilities. This awareness includes continuing education of and communication with these groups on the specific roles and responsibilities of the finance and internal audit staff so that all understand their responsibility to ensure that financial management performs its duties accurately, effectively and efficiently. More understanding also contributes to a better dialogue regarding finance and audit issues and fosters an environment characterized by transparency. This in turn reduces the ability of individuals or small groups to concentrate power within a company.