The Derek Higgs' inquiry into the role and effectiveness of non-executive directors has ended. Now the work of sifting through the myriad responses must begin. The audit review board, headed up by competition commissioner Melanie Johnson. has already reported and issued terms of reference for further consultation. But now the FRC has moved to develop existing guidance for audit committees.
Made up of a number of leading businessmen and accountants, the FRC group boasts the elusive Mark Armour, chief financial officer of Reed Elsevier, Ted Awty, UK head of assurance at KPMG and Glyn Barker, newly-appointed head of audit and business advisory services at PricewaterhouseCoopers.
The process is long, but the government has made it very clear that it doesn’t want to make any knee-jerk reactions to accounting scandals that took place on other shores.
The group’s brief is to work closely with Higgs and the Auditing Practices Board and will take account of the recommendations made by the government’s co-ordinating group on audit and accounting issues.
Already there has been greater resistance to more prescriptive rules being imposed on non-executive directors. In its response to the Higgs’ review, ICAS has urged that a balance be struck between duties imposed on NEDs and the subsequent liabilities these duties exposes them to.
It also said companies should take on younger non-executives to bring fresh ideas to company boardrooms.
Richard Raeburn, chief executive of the Association of Corporate Treasurers warned against radical change.
He said: ‘Improving corporate governance in the UK is now much more a question of people and experience than new regulation. We don’t believe that the UK model of corporate governance is broken and codes of best practice remain the way forward.’
The FRC group will meet once a month and is expected to report by the end of the year, said Charles Bridge, FRC assistant secretary.