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2025-03-07 13:56本頁面
【正文】 the quality of internal controls, it seems reasonable to believe that a more effective audit mittee will ensure timelier remediation of material weaknesses in order to maintain the effectiveness of internal controls. An effective audit mittee can directly engage in overseeing the firm’s controls by reviewing ternal accounting procedures and controls with the financial and accounting staff. When material weaknesses are detected, an effective audit mittee is more likely to take a handson approach and discuss with the internal and external auditors on how to remediate material weaknesses . By diligently following up on remendations to improve internal controls and monitoring the progress of the remediation efforts closely, a more effective audit mittee is likely to result in timelier remediation of material weaknesses . Although the audit mittee plays an important role in monitoring the remediation of material weaknesses , the board of directors can provide incremental oversight on the remediation process. Within large corporations, agency conflicts arise due to the separation of ownership and control (Fama and Jensen 1983). To deal with these conflicts and to protect shareholders’ interests, the board assumes an oversight role that involves monitoring top management, approving the corporation’s strategy, monitoring the internal control system, and ensuring the quality of financial reports. Because material weaknesses open a window of opportunity for management to engage in incongruent behaviors, the board can discharge its fiduciary duties in monitoring management by ensuring that management take prompt actions to remediate material weaknesses and maintain internal control quality. Studies have shown that the board can oust top management from the firm for aggressive accounting (Desai et al. 2006). If the board imposes similar disciplinary actions on top
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