Why Compliance is Essential to the Company

Pages: 6 (1663 words) Published: July 29, 2010





Re: king 3
Compliance is the process of adherence to policies and procedures. (Gartner, 2006) Risk and compliance are essential to the sustainability of a company and it is estimated that by 2011, companies that follow or more accurately put ‘adhere’ to processes and procedures in terms of compliance and standards will get the most business value out of their investments. The KING 3 report of corporate governance is the third report for governance in South Africa and became necessary because of the new Companies Act no.71 of 2008 and international governance trends and will come into force on 1 March 2010. The King 3 report talks about an ‘apply or explain’ basis, where the company should apply the recommendations of the report in their own way with the aim of achieving the corporate governance principles of accountability, fairness, responsibility and transparency. King 3 recognizes the significance of IT with regards to governance and has included IT governance as one of the new elements in the report. In order to gain competitive advantage and drive business potential, King 3 recommends that a company should incorporate IT together with the company strategy. The aim of this report is to discuss the impact of the King 3 report on information systems within an organization. There are 9 chapters in the report namely:

1.Ethical leadership and corporate citizenship
2.Boards and directors
3.Audit committees
4.The governance of risk
5.The governance of information technology
6.Compliance with laws, rules, codes and standards
7.Internal audit
8.Governing stakeholder relationships
9.Integrated reporting and disclosure
Each chapter has a role to play in the management of information systems specifically chapter 5 which deals with information technology and the role information technology in achieving good governance.

Impact of King 3 on Management of Information Technology in an Organization The key aspects of the King 3 report include leadership, sustainability and corporate citizenship. A Chief Information Office (CIO) appointed by the CEO to drive the information technology unit of an organization needs to provide effective leadership with regards to IT governance to force this process. This is at the heart of the responsibilities of the CIO, good governance, having a clear analysis of current state, develop an efficient resourcing plan, have a risk assessment plan and be able to measure the success of the IT department. Sustainability is about taking a long-term outlook when formulating strategies within an organization, developing fruitful relationships with employees and those in the supply chain and ensuring that ethical, social and environmental responsibilities are taken seriously. Corporate citizenship is about incorporating social responsibility when making key business decisions and is vital to the sustainability of a company. Chapter 5, IT governance has the most impact on the information technology management. Below are the principles of IT governance and how each principle impacts IT management. 5. The Governance of Information Technology

PrincipleImpact on Management of Information Technology
5.1 The Board should be responsible for information technology (IT) governanceThe board is ultimately responsible for IT governance and need to make sure that an IT charter is implemented, policies, procedures and controls are developed and an efficient framework is used and implemented throughout the company. •Companies will need to adopt frameworks such as COBIT, ITIL and ISO17799 to ensure good governance and performance management. Information security will be vital to an organizations well-being and adopting these frameworks will ensure that proper control mechanisms are developed. •The board might require that a separate risk and...

References: 1. King 3 Report
2. It Web
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