Managing corporate risk and achieving internal control through statutory compliance
| DOI | https://doi.org/10.1108/13590791311287328 |
| Pages | 25-38 |
| Published date | 28 December 2012 |
| Date | 28 December 2012 |
| Author | Nor Azimah Abdul Aziz |
| Subject Matter | Accounting & finance |
Managing corporate risk and
achieving internal control through
statutory compliance
Nor Azimah Abdul Aziz
Corporate Development & Policy Division, Companies Commission of Malaysia,
Kuala Lumpur, Malaysia
Abstract
Purpose – The objective of this paper is to encourage compliance amongst the corporate community
and to examine how statutory provisions will assist companies to implement internal control
mechanisms and in managing risks, so as to achieve business efficiency.
Design/methodology/approach – This paper may be categorised as a general review paper that
will elucidate on the efforts in integrating the corporate governance, internal control, and risk
management provisions into the Companies Act 1965 (Act 125), (CA 1965) which is a principal
legislation of company law in Malaysia.
Findings – With consistent compliance, companies will reap unlimited benefits that flow from
efficient processes which will enhance corporate capabilities, effective management, coordination and
the overall organisation’s ability to create value and ultimately, in maximising its shareholders’ wealth.
Originality/value – The paper shows that corporate risks could be managed and internal control
could be achieved by companies through compliance with a legal framework that reinforces good
governance and is infused with such provisions. The target audience of this paper is towards the
officers of companies, corporate players as well as regulators, policy makers and legislators.
Keywords Malaysia, Corporategovernance, Legislation, Disclosure, Managing corporaterisks,
Achieving internalcontrol, Malaysian CompaniesAct, 1965, Corporate statutory compliance,
Corporate disclosureand transparency
Paper type General review
Background
In the course of running a business, companies face wide ranging risks on daily basis
which include the failures of internal control mechanism, financial fiasco, catastrophe
or environmental disasters, non-compliance and regulatory violations. These risk s are
exacerbated by the advancement of technology, high acceleration in the pace of
business, multi-faceted financial sophistication and globalisation which have all
contributed to amplify the complexity of risks for companies to endure.
Apart from adherence to good corporate governance principles, companies
recognise the importance of internal control system as well as risk management, which
in turn have been regarded as useful tools in ensuring the overall achievement of the
objectives of the company and in increasing shareholders’ value. Whilst internal
control has been regarded as a process to provide “reasonable assurance” in ensuring
achievement of the company’s objectives relating to effectiveness and efficiency of its
operations, reliability of financial reporting and compliance with applicabl e laws and
regulations[1], risk management which is commonly refers to as Enterprise Risk
Management (ERM) has been defined as the:
The current issue and full text archive of this journal is available at
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Managing
corporate risk
25
Journal of Financial Crime
Vol. 20 No. 1, 2013
pp. 25-38
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590791311287328
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