Member Article

Boardroom accountability and transparency improvements welcomed

The Financial Reporting Council has published revised international standards on auditing for companies.

Changes to the Corporate Governance Code and the Stewardship Code will build in further reporting requirements for firms.

Under the new rules, auditors will mean auditors need to communicate further with those in governance.

Nick Land, FRC Board member and chairman of the Audit and Assurance Council, said, “The revised standards have been designed to continue the FRC’s work on enhancing effective company stewardship and stimulate greater transparency about the judgments made by boards and auditors.

“Adopting the clarified reporting ISAs (UK and Ireland) in the Republic of Ireland will enable Irish auditors’ reports to be more concise and more relevant.”

Roger Barker, Head of Corporate Governance at the Institute of Directors, said: “The changes to the UK Corporate Governance Code are welcome improvements in the way companies are governed. We particularly welcome the provision to encourage firms to put external audit contracts out to tender every ten years – the current average tenure for many firms’ auditors is far too long.

“We also welcome changes to the Code which recommend that companies explain their policies on boardroom diversity and report on progress. This new provision should encourage companies to engage with shareholders and other stakeholders on the actions that they are taking with respect to the diversity of their boards, including the representation of women in the boardroom.

“These are positive improvements which emphasise the need for accountability and transparency in corporate governance. Crucially, the UK’s approach is based on the ‘Comply or Explain’ principle rather than the EU’s preference for compulsion.”

This was posted in Bdaily's Members' News section by Tom Keighley .