Corporate Governance and Internal Control Systems

The Corporate Governance (CG) theme has recently been the subject of significant measures in trying to restore confidence among investors by encouraging information and communication transparency. The Italian Parliament approved Law 262 in 2005; and in 2006 the CG Committee of the Italian Stock Exchange approved the new Self-Regulatory Code for listed companies. This paper deals with general issues of controls and moves on to causes and cases of their failures in Italian “for profit” companies. On the basis of information gleaned from published records, interviews were carried out with members of Italian boards of auditors, internal and external auditors, and questionnaires to this effect were completed. The results obtained from the data so collected revealed key factors in relation to the above and to the state of the Italian situation. The interfacing of these factors and the coming into force of Law 262 were the main catalysts for a review of the roles of all Internal Control (IC) bodies. The final aim was to come up with suggestions about the possibility of finding areas for improvement within those companies IC systems