NJ

The RTY company has a board of eight directors. Ten senior managers are responsible for different departments in the company, including establishing appropriate internal control systems. Each senior manager provides a report to the board quarterly explaining the performance of their department. An internal audit department monitors the internal control systems and reviews the senior managers' reports. The chief internal auditor then provides a separate report to the board on the work carried out by the internal audit department. Required: a) Using examples from the RTY company, explain the key concepts of agency theory. (14 marks)