Who is considered the governing authority in an organization for compliance-related issues?

The board of directors is recognized as the governing authority in an organization regarding compliance-related issues because it holds the ultimate responsibility for overseeing the organization’s compliance programs and ensuring that the company adheres to applicable laws and regulations. The board sets the tone at the top, establishes ethical standards, and supports the creation of a culture of compliance, which is crucial in preventing and detecting fraud.

In addition, the board is tasked with ensuring that there are adequate resources allocated for compliance activities and that effective policies and procedures are in place. It also monitors the effectiveness of these compliance efforts and may appoint specific individuals, such as the compliance officer, to carry out day-to-day compliance functions, but the accountability for compliance rests primarily with the board.

While the CEO plays a significant role in implementing the board’s directives and may oversee the operational side of compliance, and the compliance officer is responsible for actively managing compliance activities, neither of these roles carries the same level of accountability as the board itself. External auditors provide an independent assessment of the company's compliance with various regulations but do not serve as the governing authority for compliance issues.