FEI Meets With Auditors From China

Jan. 9, 2009

FEI Summary

Pictured above, left to right: Michael P. Cangemi, FEI Past President, Senior Advisor and COSO board member; Li Su,  Director General of the Yunnan Provincial Department of Audit ; and Sanjay Anand, President of the Governance-Risk-Compliance Group and the Sarbanes-Oxley Institute. Photo credit: Triway Enterprise Inc.

On Jan. 9, 2009, FEI past president and current senior advisor Michael P. Cangemi spoke to a delegation of auditors from China who were visiting the United States to learn more about U.S. practices and perspectives on corporate governance and internal control.

The delegation, consisting of 22 auditors from the Yunnan Province of China, was led by Li Su, the director general of the Yunnan Provincial Department of Audit. He was accompanied by his deputy director and a number of division chiefs.

FEI was invited to speak to the delegation by Triway Enterprise Inc., an organization founded in 1992 with offices in the U.S. and China, which coordinates visits of Chinese business groups in the U.S. and arranges other training, teaching and cross-cultural programs. Cangemi invited Sanjay Anand, CEO of The Governance-Risk-Compliance Group and The Sarbanes-0xley Institute, to join him in speaking to the group. 

Cangemi provided the group with some background information on Financial Executives International (FEI), a leading association of financial executives, and its research affiliate, the Financial Executives Research Foundation (FERF). He then covered current trends in corporate governance and internal control. Cangemi is also a past president of ISACA (previously known as the Information Systems Audit and Control Association), the author of an information technology auditing text-book, and president of Cangemi Co. LLC. 

The group from China was very interested in the Committee of Sponsoring Organizations of the Treadway Commission (COSO), including how COSO’s internal-control guidance could be used in China and the impact of The Sarbanes-Oxley Act of 2002 on companies in China.

 Note: China Issues Legislation for Internal Control Framework, published Nov. 4, 2008 in China Briefing, states:

"China has issued legislation detailing the comprehensive requirements needed for a company’s internal control framework called the Basic Standard for Enterprise Internal Control.

The legislation was launched by the Chinese Ministry of Finance, the National Audit Office and all three major industry regulators: the China Securities Regulatory Commission, the China Banking Regulatory Commission and the China Insurance Regulatory Commission.

It is effective beginning July 1, 2009 and will be initially enforced among listed companies while also encouraging adoption by other large and medium-size unlisted companies."

Serving as FEI’s representative on the COSO board, Cangemi provided background information on the history of COSO, an organization that began in the 1980’s as the National Commission on Fraudulent Financial Reporting (also known as the "Treadway Commission" for its founding chairman James Treadway). Cangemi noted that COSO consists of the Treadway Commission’s five sponsoring organizations  - the American Accounting Association, the American Institute of Certified Public Accountants, the Institute of Internal Auditors, the Institute of Management Accountants and FEI – and he provided background on COSO‘s various publications, including COSO’s Internal Control-Integrated Framework (1992), Guidance on Enterprise Risk Management (2004), Guidance for Smaller Public Companies (2006), and upcoming guidance (to be published later this  month) on Monitoring Internal Control Systems.

Information about COSO’s upcoming guidance on monitoring can be found in this article, published in the January/February 2009 issue of Financial Executive magazine, and watch for updates on COSO’s website, www.coso.org .

Pictured above: Delegation of auditors from Yunna Province of China, with speakers Michael P. Cangemi (bottom row, second from right), and Sanjay Anand (bottom row, fourth from right). Photo credit: Triway Enterprise, Inc.

Prepared Jan. 26, 2009 by Edith Orenstein, Director, Technical Policy Analysis, Financial Executives International (FEI). This summary does not represent FEI opinion unless specifically noted above.