THE IMPORTANCE OF CORPORATE GOVERNANCE IN THE STUDY OF ACCOUNTING INFORMATION SYSTEMS (STUDY OBJECTIVE 7)
Consistent reporting and management of information has never been more important, considering the recent increases in government oversight and audit requirements. In addition to the Sarbanes–Oxley Act and other corporate governance guidelines, even the income tax code has become increasingly complex. Overall, there is more focus on accounting information and improvements within financial systems.
CEOs and corporate managers must be in tune with the ever-changing financial picture of the company. IT departments are expected to help management achieve compliance by leveraging technology. Companies must be equipped with well-managed financial processes and related technological enhancements to make sure that corporate leaders have information readily available. Managers cannot be expected to sort through volumes of supporting documents when they need to get answers. Electronic record keeping is essential, but it depends upon an IT infrastructure that supports the company's strategies and goals. Even in nonpublic companies, in which compliance with the Sarbanes–Oxley Act is not required, IT managers are becoming increasingly popular as they provide corporate governance solutions to management.
THE REAL WORLD
The Dow Chemical Company and BASF have more in common than chemical products; these companies each use the Internet to deliver training on their ethics codes. Advanced technology and information systems make it possible for a code of ethical conduct and the underlying principles to be disseminated to employees in such a way that they can be tied to day-to-day operations. These companies are extending their reach to reinforce their values so that employees understand what an important role ethical conduct plays in their jobs. Their strategy also provides a monitoring device for issues such as conflicts of interest and other items that are increasingly important in today's era of corporate compliance. This is quite a feat, considering that the use of dozens of different languages is involved to reach hundreds of thousands of employees located all around the globe.6
The business landscape is being transformed by technological innovations such as cloud computing, social media, mobile technologies, and data analytics. As data are rapidly increasing in scope and complexity, data mining software (discussed in Chapter 13) is becoming more important in the corporate governance process because it can help signal fraud. For example, the software provides analytical data that can help uncover suspicious patterns which might indicate fraud. Although this type of analysis is not required by Sarbanes–Oxley, many top managers are now demanding that this type of information be available. Managers typically do not have time to spend collecting data; they need to have information readily accessible so that they can devote ample time to traditional management roles such as strategic decision making. Accordingly, participants in the corporate governance process should be concerned about transparency in how these technological enhancements are being used and managed across the organization.
Those with insight into the study of accounting information systems realize that information has business value. As such, accounting information is key to the corporate governance process, as well as to the overall economic health of the company. In addition, corporate governance is closely related to the other accounting information systems topics in this text; it serves as a link between the coverage of the control environment in Chapters 3 and 4 and IT governance in Chapter 6.