Directions for Reshaping Corporate Environment to Avert Financial Crisis Caused by Frauds: A Theoretical Framework

다국어 초록 (Multilingual Abstract)

Success of a nation's economy depends on how well savings are funnelled to entrepreneurs. A country that does this distribution well helps the entrepreneurs capitalize their innovative ideas and create jobs. For investors to channel their savings to entrepreneurs, they must be able to base their investment decisions on the financial information which is prepared under management's responsibility. Motivated by personal gains, management often attempts to report financial statements fraudulently, which shakes the public's confidence in the integrity of financial reporting. To provide reliable financial information to the capital market participants for their decision making, monitoring on the financial reporting process is inevitable. Because shareholders do not directly participate in the operation of a business, they need a mechanism to protect their investments. To that end, they elect directors of the board as their representatives to watch for their interests. For directors to perform their prescribed duties, they must be independent of management and possess financial expertise. But outside directors' lack of information on the business activities restricts their abilities. Audit committee helps the board discharge their responsibilities by handing out the information that it has learned from internal and external auditors. In addition, good internal control system enhances the quality of the financial information. Internal auditors monitor and evaluate the effectiveness of internal control to locate any weaknesses and implement them. This study is aimed to help participants in the capital market make their rational decisions basing on trustworthy financial reports they were provided. To that end, tasks of the board of directors, audit committee, and internal auditors must be coordinated to ensure prevention of frauds, or detection if they occur. When they collaborate in unity, financial information provided under that governance would be reliable and help the various market participants achieve their goals.

국문 초록 (Abstract)

국가경제의 성패는 여유투자자금이 기업의 자금필요를 얼마나 잘 충족시키는지에 달려있다. 이것이 효과적으로 이루어지는 나라의 기업가는 창의적인 아이디어를 구현시킬 수 있을 것 이며, 이는 또한 많은 일자리를 창출할 수 있다. 투자자들의 의사결정은 경영자의 책임 하에 작성되는 재무정보에 근거한다. 그러나 때로는 개인적 욕심에 눈이 먼 경영자는 허위로 재무보고를 하며, 이는 재무보고에 대한 신뢰파괴를 불러와 자본시장의 기능마비를 야기 시킬 수 있다. 자본시장 참여자들의 의사결정에 필요한 신뢰성 있는 정보를 제공하기 위해서 재무보고과정에 대한 감시가 필요하다. 또한 기업의 주인인 주주는 경영에 직접적으로 관여하지 않기 때문에 그들의 투자를 보호하기위한 제도적 장치로서 이사회가 필요하게 된다. 이사들이 주주의 대리인으로서 본연의 의무를 수행하기 위해서는 경영자로부터 독립적이어야 하며, 재무 및 회계분야의 전문성을 갖춰야 한다. 그래서 외부이사가 영입이 되는데 이들은 기업정보 습득에 한계가 있다. 이러한 정보 불균형 상태를 해소하기 위해 감사위원회가 내부 및 외부 감사인들 로부터 얻은 정보를 이사회에 제공함으로써 이사회가 주주보호를 위한 본연의 업무를 수행 할 수 있도록 돕는다. 또한 기업의 효과적인 내부통제는 재무정보의 신뢰성 제고에 증진을 한다. 그리고 내부 감사인 들은 내부통제가 효과적으로 이루어지고 있는지 또한 취약 및 개선할 점은 없는지 꾸준히 감시하고 평가를 한다. 부정의 예방과 적발 그리고 재무보고의 신뢰성을 보장하기위해, 기업지배구조의 중추인 이사회, 감사위원회, 내부감사인 들은 서로 유기적으로 협력이 이루어져야 하며, 이러한 구조아래서 산출된 재무정보는 신뢰할 수 있을 것이며, 이는 자본시장 참여자들이 의사결정을 합리적으로 할 수 있도록 도울 것이다.

목차 (Table of Contents)

• 국문요약
• Ⅰ. Introduction
• Ⅱ. Principal-Agent Relationship
• Ⅲ. Business Frauds
• Ⅳ. Reshaping Corporate Environment For Transparent Financial Reporting
• Ⅴ. Conclusion
• References

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