ISDS 351 Chapter 5 Textbook notes
ISDS 351 Chapter 5 Textbook notes ISDS 351
Cal State Fullerton
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This 2 page Bundle was uploaded by Melinda Chou on Thursday September 22, 2016. The Bundle belongs to ISDS 351 at California State University - Fullerton taught by Malini in Fall 2016. Since its upload, it has received 8 views. For similar materials see ISDS in Business at California State University - Fullerton.
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Date Created: 09/22/16
Chapter 5: Corporate and IT Governance WHAT IS GOVERNANCE? Corporate Governance: The set of processes, customs, rules, procedures, policies, and traditions that determine how to direct and control management activities. o Addresses issues such as Preparation of the firm’s financial statements Monitoring the choice of accounting principles and policies Establishment of internal controls Hiring of external auditors Nomination and selection of people to the boar of directors Compensation of the chief executive officer and other senior managers Management of risk Dividend policy Senior executives must have character and integrity to avoid improper conduct IT Governance: A framework that ensures that information technology decisions are made while taking into account the goals and objectives of the business. o Decision-making process itself o Defining who makes the decisions o Who is accountable for results o How the results of decisions are communicated, measured, and monitored o Recognized that IT governance is not the responsibility of IT management but of executive management, including the board of directors Two primary goals of effective IT governance are o Ensuring that an organization achieves good value from its investments in IT Requires close alignment between business objectives and IT initiatives o Mitigating IT-related risks Embedding accountability and internal controls in the organization Ensuring That an Organization Achieves Good Value from Its Investments in IT Only IT projects that are consistent with the business strategy and that support business goals and objectives should be considered for staffing and funding This process ensures that IT is effective and is being put to use on the appropriate projects Mitigating IT-Related Risks Failure of IT systems and processes to meet a wide array of state and federal government rules and regulations o Ex. Sarbanes-Oxley – protect the interests of investors and consumers by requiring that the annual reports of public companies include an evaluation of the effectiveness of internal control over financial reporting, requires a signed statement by the CEO and CFO Security risks from hackers and denial-of-service attacks Privacy risks from data and identity theft The treat of business disruption due to a disaster or outrage Internal control: The process established by an organization’s board of directors, managers, and IT systems to provide reasonable assurance for the effectiveness and efficiency of operations, the reliability of financial reporting, and compliance with applicable laws and regulations o Good internal controls is separation of duties Essential for any process that involves the handling of financial transactions so that fraud requires the collusion of two or more parties o Key role in preventing and detecting fraud and protecting the organization’s resources o
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