Chief executive officer (CEO)

Definition

The Chief Executive Officer (CEO) is the highest-ranking executive in a company, responsible for making major corporate decisions and managing overall operations. The CEO acts as the main point of communication between the board of directors and corporate operations.

5 Must Know Facts For Your Next Test

1. The CEO is ultimately responsible for establishing and maintaining effective internal controls within an organization to prevent fraud.
2. A CEO must ensure that internal control policies are in place to safeguard assets, ensure financial reporting accuracy, and promote operational efficiency.
3. CEOs play a crucial role in setting the tone at the top, which influences the organizational culture regarding ethical behavior and compliance.
4. Part of a CEO's duties includes overseeing risk management practices to identify potential areas where fraud could occur.
5. The CEO often collaborates with other senior executives like the CFO to implement and monitor internal control systems effectively.

Review Questions

• What are some key responsibilities of a CEO in maintaining internal controls?
• How does a CEO influence the organizational culture in terms of ethical behavior?
• Why is it important for a CEO to work closely with other senior executives on internal controls?

Related terms

Chief Financial Officer (CFO): Responsible for managing the company's finances, including financial planning, management of financial risks, record-keeping, and financial reporting.

Internal Controls: Processes put in place by an organization to ensure integrity of financial and accounting information, promote accountability, and prevent fraud.

Risk Management: The process of identifying, assessing, and controlling threats to an organization's capital and earnings.