Corporate Governance and Audit

Abstract

According to statistics during 2007, public expenditure in Albania exceeded 360,000 million Albanian Lek. How this money is spent and the quality of services it provides is critically important to us all as users of services and as taxpayers. Because of that we all need governance of our public services to be of a high standard. The main aim of this paper is to show how good governance leads to good management, good performance, good stewardship of public money, good public engagement and, ultimately, good outcomes. Under such situation, corporate governance is being examined more closely than ever before. Media coverage of corporate crises increasingly focuses on the highest management; what are mangers doing and do the relationships they have with the company weaken the effectiveness of their oversight? In this paper the authors have utilised standard research methods of questionaries collecting data from to 120 internal audit units in different organisations in Albania. Findings of the study indicates that: There is clear evidence that many managers have difficulties in fulfilling their responsibilities. To help them with their tasks, there is an urgent and ongoing need to be clear about the purpose of governance and the role of the governor, expand the supply of governors, improve induction programs and encourage good relationships between governors and the executive teams who are accountable to them. Internal auditors, by having an objective view from inside the organization, can play a vital role in the governance process by keeping management, the board, and external auditors aware of risk and control issues and by assessing the effectiveness of risk management. Effective corporate governance requires a system of checks and balances, assuring that the right questions get asked of the right people. An effective system of corporate governance will establish a link among management, the board, the external auditor, and the internal auditor in a way that creates a structure (with incentives and disincentives) that enables people with overlapping but not entirely congruent interests to have a sufficient level of confidence in each other and the organization as a whole. As result of a changing governance environment, the role of auditors is increased. They must continue to monitor such changes and evaluate how they impact the role of internal auditors in the future. Internal auditors also should be encouraged to seek different tools,