| The objectives of this study were twofold: (1) to develop a conceptual framework to link corporate governance, board accountability, internal control, with auditing; and (2) to gather information by mailed questionnaires to chairpersons of the five hundred largest Canadian corporations about the extent of board evaluations and audits of their boards, if any, and about the acceptance of board audits. Systems theory was used as the conceptual framework to unite diverse literature and to provide an underpinning for the internal control concept. When compared against systems theory, the internal control concept in use was found too narrow and an effective barrier against audits extending into corporate governance. Consequently, it obstructed an opportunity for objective and rigorous feedback to boards and improved accountability to corporate stakeholders by limiting the review of auditors to financial and operational areas.; Survey results showed most corporate boards had not adopted formal roles, standards, or performance appraisal practices. When appraised, matters regarding board composition and structures were most frequently evaluated. Most chairpersons responded that boards were the ultimate level of internal control with internal control features that should be reviewed. But predictably perhaps, 76.9 percent of the one hundred and nine chairpersons who responded preferred board self-evaluations to audit. Board audits were rare. When done, board ethics, membership, management, and role were the most important matters. While most chairpersons did not support an external or an internal audit of the board, a significant number did to obtain objective feedback. As expected, roles of boards varied with the pattern of ownership with stronger roles reported by widely held companies and weaker ones for controlling shareholder companies. Also, director turnover was greater in controlling shareholder companies. Overall, responses showed influence by ownership patterns.; The results of this study show there was a need to reconsider the internal control concept and a need for audits of boards of directors as these were missing from corporate governance accountability. |
