Impact of Organization Culture on Internal Controls

Via Sonia Jaspal's RiskBoard.

Business ethics show in all aspects of business conduct, from the board room strategies to the front desk personnel. It goes beyond legal requirements, and shows whether business is conducted on values of integrity, honesty and fairness. It shows whether employees at all levels are able to walk the talk. A clearly defined and implemented code of conduct improves the organization culture. However, an organization which has not implemented a code of conduct may have a negative organization culture. In such a case, decisions are taken arbitrarily, organization lacks transparency and may disregard laws and regulations to achieve profitability. Commitment to follow the business ethics, reflect whether organization has high, medium or low compliance risk. High compliance risk raises questions on reliability and authenticity of financial statements.

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