The Financial Reporting Council (FRC) has published it’s revised UK Corporate Governance Code which is applicable to all UK listed companies.  The purpose of the Code is to provide guidance for organisations on their stewardship, and in these difficult and challenging economic times, the time was ripe for a review.

 

The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company.  Clearly, a fundamental aspect of this is effective risk management and the Code identifies an organisation’s Board as responsible for ensuring this is carried out.

 

The board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The board should:

 

· maintain sound risk management and internal control systems

 

· Establish formal and transparent arrangements for considering how they should apply the corporate reporting and risk management and internal control principles

 

· Maintain an appropriate relationship with the company’s auditor

Revised UK Corporate Governance Code reinforces the need for risk management

© R!sk Matters Ltd  2011

because risk matters

Rounded Rectangle:

r!sk matters

 

Rounded Rectangle: The Code is a guide to a number of key components of effective board practice. It is based on the underlying principles of all good governance:
accountability, 
transparency, 
probity and 
sustainability over the longer term.

The Code follows the UK Corporate Governance Principle of “Comply or Explain” and contains a mix of broad principles and specific provisions, it is not a rigid set of rules.

The Code recommends the Board should review the effectiveness of the company’s risk management and internal control systems at least annually.

The new Code applies to accounting periods beginning on or after 29 June 2010 and, as a result of the new Listing Regime introduced in April 2010, applies to all companies with a Premium Listing of equity shares regardless of whether they are incorporated in the UK or elsewhere.

The Code can be downloaded from the FRC website