Corporate governanceIdeas and opinions about corporate governance are in constant flux, making the concept difficult to describe and explain. And at the moment, economic disruption is accelerating the pace of change. Here, we summarise the key concepts and look at internal audit's role.Corporate governance primarily refers to organisations with commercial and business operations,in particular limited companies. e use the term in its widest sense, applying it to all types of private and public sector organisations.!"C's latest guidancehat is corporate governance#$takeholder expectations of internal auditInternal audit's roleFRC's latest guidance%he !inancial "eporting Council &!"C' issued an updated version of the () Corporate *overnance Code in $eptember +,-.. %his significantly enhances the /uality of information investors receive about the long0term health and strategy of listed companies."ead how the changes will affect internal audit%he !"C has also published new guidance on risk management, internal control and related financial and business reporting, which reflects the changes made to the () Corporate *overnance Code. %his guidance revises, integrates and replaces two of its earlier publications1 Internal Control1 "evised *uidance for 2irectors on the Combined Code *oing Concern and 3i/uidity "isk1 *uidance for 2irectors of () Companiese understand that the !"C will now be working on updating the guidance for audit committees to reflect the new Code, and that this will cover the role of internal audit in some detail.What is corporate governance?%he IIA definition of corporate governance, included within the International $tandards is1*overnance is the combination of processes and structures implemented by the board in order to inform, direct, manage and monitor the activities of the organisation toward the achievement of its ob4ectives. Although there is no universally accepted definition, the first version of the () Corporate *overnance Code was produced in -55+ by the Cadbury Committee. Its paragraph +.6 is still a classic definition1Corporate governance is the system by which companies are directed and controlled. 7oards of directors are responsible for the governance of their companies. %he shareholders8 role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.%he responsibilities of the board include setting the company8s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship. %he board8s actions are sub4ect to laws, regulations and the shareholders in general meeting.Corporate governance is therefore about what the board of a company does and how it sets the values of the company, and is to be distinguished from the day to day operational management ofthe company by full0time executives.Stakeholder expectations of internal audit "ecent events have highlighted the critical role of directors in promoting good corporate governance. In particular, boards are charged with ultimate responsibility for the effectiveness of their organisations8 internal control systems. %hese events have highlighted the key role that internal audit can play in supporting the board in ensuring ade/uate oversight of internal controlsand the effectiveness of corporate governance. How an organisation designs and practices the principles of effective governance vary dependingon the si9e, complexity, and life cycle maturity of the organisation, its stakeholder structure or legal and cultural re/uirements.%he head of internal audit should work with the board and the executive management team, as appropriate, to determine how governance should be defined for internal audit purposes and the extent and expectations of internal audit assurance and consultancy needed to satisfy the internal audit charter.Internal audit's role%he definition of internal auditing and International $tandards identifies that internal audit has a role to play in evaluating and helping to improve governance processes.%he International $tandards make specific reference to assessing and making recommendations for1 promoting appropriate ethics and values within the organisation ensuring effective performance management and accountability communicating risk and control information coordinating the activities of the board, external and internal auditors and management, and communicating what they do%he internal audit charter should make reference to the scope of the work of internal audit and this should include corporate governance activities and processes.Delivering internal auditThe internal audit processhile every internal audit is uni/ue, the process of internal auditing is similar for most engagements and normally consists of four stages. %he process described below briefly explains what happens during each stage and outlines the /uestions and actions the internal auditor needs to address for completion.1 Research7efore internal auditors begin, they gather a broad range of information about the sub4ect area or activity they are about to review. hat are the ob4ectives# hat activities occur# How are they performed# How is performance measured# hat are the risks &current, emerging, hori9on'# hat are the responses to risks# How to managers know responses to risks are effective# ! "lanningAuditors use their analysis of the information to determine and agree the scope and ob4ectives of the audit with the audit manager and managers in the organisation. 2etermine the scope of the audit :stablish and agree audit ob4ectives and the criteria to be sued ;btain resources with appropriate skills, knowledge and experience $et targets, outputs and deadlines %imetable and schedule events