In this business report it will address the following
- The ethical issues related to financial management
- Internal and External audits in guarding against the ethical issues.
- Primary safeguards against unethical financial behaviour
This report is written in the aim of assessing the accuracy of the phrase, ‘Timely and valid internal and external audits are a primary safeguard against unethical financial behaviour’. The reports objective is to determine whether internal and external audits are a ‘primary’ safeguard against unethical financial behaviour.
Ethical consideration are close related to legal aspects of financial management. Legislation is in place to guarded against unethical business activities but there is often a time lag between the recognition of a problem and its implements through law. Law relating to corporations including the responsibilities of auditors and requirements for disclosure for corporations. For example, in relation to financial management, directors have a duty to: Act in good faith, Exercise power for proper purpose in the name of the corporation, exercise discretion reasonably and properly, Avoid conflicts of interest. Financial management is an area of business operations that attracts considerable attention in terms of its legal and ethical aspects as the misuse of financial resources has considerable impact on the survival of the businesses and the wellbeing of owners, shareholders and employees.
Internal and External audits assist in guarding against unnecessary wast, inefficient use of resources, misuse of funds, fraud and theft. Audits are carried out on the financial records of a business to see if they are prepared in the line with accepted accounting standards and that records provide accurate information for users. They check the control procedures of a business by physically checking assets. For Example, cash is counted, the condition and the amount of the inventory is checked, and accounts receivable...