Identify and discuss the most important weaknesses in Tyco's internal controls and governance systems.

Internal controls should provide reasonable assurance that fraud will be prevented or detected. A strong control environment constitutes the most pervasive element to deter fraud. Control environment includes integrity, ethical values and competence, management's philosophy and operating style, and the attention and direction provided by the board of directors. In Tyco's control environment, integrity, independence and separation of duties were seriously compromised.
Tyco's policy and/or compliance reinforcement were insufficient to encourage employees who must have witnessed excessive transactions to blow the whistle. Either they didn't know what was right, or didn't know what to do about it, or didn't have the courage to come forward. High-level executive collusion went on unreported. The legal department, or office of the general counsel, typically plays a key role in reviewing disclosure documents for compliance with applicable laws and regulations. The legal department also assists management in establishing and maintaining internal controls to prevent and detect noncompliance with other laws and regulations. The General Counsel was also involved in Tyco's fraud with the CEO and CFO.
The internal audit function should examine, analyze, and make recommendations on matters affecting the company's policies and internal controls. Internal auditors did not raise any issue regarding anti fraud controls or management illegal actions.
The board of directors has a responsibility to the company's shareholders to oversee management's performance, and relate it to compensation and benefit plans  but they did not do so. At least one of Tyco's directors was receiving additional pay as consultant.