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Governments and governmental agencies enact governance related laws and regulations to ensure that entity managers refrain from participating in corrupt, fraudulent, or unethical behavior. Governments and governmental agencies also enact laws and regulations to provide for stakeholder confidence that management will perform their fiduciary responsibilities. This fiduciary relationship between stakeholders and management typically requires that the organization’s management safeguard assets entrusted to it for use by the entity in generating revenues or paying expenses. To sustain compliance with this legal objective; there is an expectation that an enterprise’s management will provide accurate and complete information about the firm’s past and current performance, as well as their assessments of any confirmed future economic events that may/will affect the organization’s financial status and its present financial position.
Government laws and regulations usually require an entity’s management to design, implement, and maintain a system of controls. However, controls existence and effectiveness verification are commonly an external and internal statutory audit responsibility. Auditors that conduct these entity compliance attestation engagements focus on examining, reviewing, or performing agreed-upon procedures regarding a subject matter; or an assertion about a subject matter, and reporting evidentially-supported results.
Separately or jointly, government-sponsored laws and regulations can impose practice audit requirements that affect compliance attestation service efforts. Where laws and regulations promote managements' accountability of entity assets to stakeholders, information technology (IT) legal compliance audit area, and/or ambit may include government and governmental agency mandates. Alternatively, operationally perceived noncompliance risk can determine an engagement or the entity’s audit committee can direct IT audit coverage to assess expected compliance by the entity's management. Nevertheless, professional IT auditors must evaluate potential irregularities and illegal acts during the entire IT assurance process, even when directed by the audit committee to focus on a particular IT auditable unit -- within the engagement's audit area.
Enactment of laws continues, and the regulatory environment has become more complicated due to unacceptable conduct remediation. Consequently, entities continue to be compelled to demonstrate compliance with legal mandates through documented assurance assessments.
The migration from manual to technology generated information has resulted in verdicts and judgments where liability, guilt, or innocence occurred solely or mainly on electronically encoded evidence. Reliance on technology created information as evidence raises issues and challenges from a management perspective that need appropriate controls through effective governance and audit.
Governance reflects how an enterprise achieves its stated mission. Deploying a governance framework may inhibit managerial noncompliance; but, it is not an absolute deterrent. As long as multiple regulatory agencies have government supported agendas, variances can exist that induce comprehensive legal compliance reviews of organizations. Primary to numerous decrees control is a thorough analysis of what is required and ensuring quality documentation supporting an entity's legal compliance efforts.