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Journal of Management and Governance

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01-11-2010

Regulation by disclosure: the case of internal control

Authors: Laura F. Spira, Michael Page

Published in: Journal of Management and Governance | Issue 4/2010

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Abstract

In this paper we explore the use of disclosure as a regulatory tool, using as an illustration the current UK requirements regarding the disclosure of information about internal control. After discussing the broad concept of regulation by disclosure, we trace the evolution of concepts of internal control and its reporting, describing the background to the Turnbull guidance for directors on internal control reporting, the basis of current UK requirements. We then examine recent examples of internal control disclosures, identifying the range of ways in which they address the disclosure requirements and considering the possible impact of the disclosure requirements on corporate behaviour and on the audiences for disclosure. We conclude with some reflections on the disclosure life cycle. The paper contributes to the literature on disclosure by specifically considering the role of disclosure as a regulatory tool and by examining the nature of specific disclosures in an area of continuing interest, that of internal control.

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“Internal control is broadly defined as a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

Effectiveness and efficiency of operations.
Reliability of financial reporting.
Compliance with applicable laws and regulations.”

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Title: Regulation by disclosure: the case of internal control
Authors: Laura F. Spira
Michael Page
Publication date: 01-11-2010
Publisher: Springer US
Published in: Journal of Management and Governance / Issue 4/2010
Print ISSN: 1385-3457
Electronic ISSN: 1572-963X
DOI: https://doi.org/10.1007/s10997-009-9106-9

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