Assume that you are being recruited by a company (Time Warner Inc.) for one of its managerial positions. The position is in a field of your professional expertise, and involves some financial responsibilities. Naturally, you feel undecided at first. On the one hand, you are not familiar with the company. You do not wish to be part of a “bad” company. On the other hand, you can research about the company to familiarize yourself with it. The offer is generous and you are eager to contribute to and grow with a “good” company. You have to do some research and analysis before deciding to join the company or not. The following are some questions addressing governance and financial concerns that you consider before making up your mind. Answer each of the following questions, to reach a conclusion at the end.

AUDITORS

Continue to assess the governance environment of the firm by examining its auditors. What is the role of external auditors in corporate governance? Are they responsible for the firm’s financial statements and internal controls? Discuss examples of independence issues with external auditors? If there are independence issues, what are some mechanisms or procedures to mitigate them? Who are the external auditors of your company and does there seem to be independent issues with these auditors?

INTERNAL CONTROLS

Continue to assess the governance environment of the company by examining its internal controls. What are internal controls in the context of a business organization? Under the Sarbanes Oxley Act of 2002, who (the board directors, management, or auditors) is responsible for designing and maintaining the company’s internal controls? Does there seem to be any internal controls issue within the company? Your answer should incorporate the management’s report on internal controls in the company’s Annual Report and the auditors’ attestation on internal controls.