Setting the tone at the top is a key requirement of board governance. Management must establish standards of conduct and follow them. These standards contain the values, philosophy and mission or the organization.
How does this impact the Organization's audit?
Recent changes to the audit standards require the auditor to evaluate the “control environment”. This term is one of the five elements of internal control as defined by the Committee of Sponsoring Organizations (COSO) in the early 1990’s. The Sarbanes Oxley Act of 2002 also encompasses this concept in federal legislation directed at public companies. Those charged with governance (boards) and management (senior pastors) should ask themselves how have they conveyed their attitudes regarding fraud and ethical values to others within their church or ministry. This is a question your auditors will be asking you.
