Introduction to Governance Auditing
Definition: This is the examination of the administration procedures, finance procedures and ethics of the organization to give an independent and fair view of the current position with regard to the professional and legal standards. It is independent and expression of opinion on the administration and governance procedures in accordance with the appointment and statutory requirements.
Governance is term used to describe persons entrusted with the supervisory, control and direction of any entity, like board of directors, audit committees and any other auxiliary committee which has the responsibility of managing any organization.
Governance‖ applies to nearly all entities: for-profit businesses, nonprofit organizations and governmental entities. It relates to the relationships between management, the board of directors, and other stakeholders, such as stockholders, donors, or citizens. At the fundamental level, good governance is all about Checks and Balances. Auditors love checks and balances, although we usually say ―internal control.‖ Same thing. But what does that have to do with governance?
Organizations have a governance audit to gain assurance about their governance statements. To have a good governance audit, you generally need good internal control. How does an organization find out if they have good governance checks and balances? And why would it want to?
Let‘s focus on the nonprofit and governmental sectors. Many of us volunteer on boards of local nonprofits, or are appointed to advisory boards for local governments. Some even hold an elected office. In these capacities, we are impacted the effectiveness of the organization’s governance structure and how it functions. In fact, we are active participants in the system of governance. Can we just assume that the governance system is operating as it should? How would we know if it is not? And why should we be concerned about this?
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