CBI dismisses need for governance review

CBI dismisses need for governance review

CBI calls for regulatory reviews to be rationed as many companies are fighting for survival

A review into corporate governance by the
Financial Reporting Council
is unnecessary, according to the CBI, which has called for regulatory reviews to
be rationed when many companies are fighting for survival.

The comments come after the FRC announced a review into corporate governance
guidelines for listed companies last week.

The review by the financial reporting watchdog will examine all aspects of
the Combined Code on Corporate Governance, including its impact on company
boards, executive remuneration and companies’ assessment of risk.

The FRC review, which is due to publish its conclusions by the end of this
year, comes only weeks after the Treasury announced an independent review into
banking industry’s governance rules, led by Sir David Walker.

CBI deputy director-general John Cridland said: ‘The Walker review is looking
at corporate governance in the banking sector following recent events. Given
this review the CBI does not see a need to also review corporate governance in
the wider business community at this time.

‘We accept that the Walker review may identify issues of relevance to all
businesses, but when businesses are focused on overcoming the economic crisis
regulatory initiatives need to be targeted.’

Launching the corporate governance review last week, FRC chairman Sir
Christopher Hogg said: ‘While there is no assumption that the code is
fundamentally flawed or that a different regulatory framework for corporate
governance could have alleviated the financial crisis, we are clear that the
time is now ripe for testing the code’s content and application.’

The FRC is also seeking views on how companies provide information to
investors.

If the FRC proposes any changes to the Combined Code, or the way in which it
operates, they will be subject to further consultation.

Since its introduction in 1998, the code has been updated regularly, includ
ing in 2006 and 2008.

All companies incorporated in the UK and listed on the main market of the
London Stock Exchange are required to report on how they have applied the code
in their annual report and accounts. Overseas companies are required to disclose
the significant ways in which their corporate governance practices differ from
the Code.

The Turnbull guidance advises companies on how they can comply with the code
for internal financial control and risk assessment.

The FRC has published guidance on audit committees and the Higgs report has
guidance relating to non-executive directors.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource