Listed companies have been told to begin an immediate review of theiry. corporate governance frameworks or risk missing the end-of-year deadline for establishing controls required under the Turnbull report.
Nigel Turnbull, Rank Group finance director and chairman of the working party that developed the guidance, said boards should implement the guidance now rather than wait for final proposals to be published by the end of September.
Once the proposals are ratified by the Stock Exchange listed companies will have to adhere to them.
Companies will then have to comply with requirements for accounting periods ending on or after 23 December 2000. They will need to disclose that this has been done in the annual report for the first accounting period ending on or after 23 December 1999.
Turnbull said responses to the consultation paper had been reviewed and the final paper would not deviate widely from the draft. ‘We received in the region of 70 responses and they were very constructive, but I am very keen that finance directors should react as they can assume that the transitional arrangements which were proposed is what will eventually come out,’ he said.
He suggested boards started by evaluating the risks to their businesses on a ‘top-down’ basis and then discuss their findings with their auditors.
Internal auditors welcomed encouragement to companies to act quickly.
David Brilliant, vice-president and internal audit specialist of American bank Donaldson, Lufkin & Jenrette, argued companies should have been reviewing procedures since the document was originally published in April.
He also warned those companies that were falling behind to act now to comply with the rules before they were finalised.
‘There will not be much time left between when Turnbull becomes regulation and the end of the year unless companies start now,’ he said.
He hoped it would be a simple matter of reviewing existing procedures, but said boards should start analysing risks and use internal auditors to provide independent assurance.
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