In October 2020, the FRC published a discussion paper, A Matter of Principles – The Future of Corporate Reporting with the aim of encouraging better, more transparent, annual reporting.
Reading this got me thinking about the importance of corporate governance.
Have you read it yet? You have until 5 February 2021 to respond.
What’s the first thing that springs to mind when you’re asked the question: ‘What is good corporate governance?’
Personally, I think of an organisation that shares my values, treats me fairly, is transparent and has a leader that I trust. Is that a fair expectation or is it a ‘castle in the air’ wishlist? Perhaps an organisation that ‘saintly’ would be hard to find. Also, is it that organisations aspire to?
The aim of most organisations is to meet their stakeholder expectations (profit, market size, reach, impact, outcomes, reputation etc), so is it reasonable to ask them to put values, leadership integrity and transparency first? I think so, and I think that there is a growing opinion that this is exactly what organisations should be aiming for.
Stakeholders generally want to be able to trust a company to deliver against their expectations, whether that be to deliver a profit or charitable aims. Good corporate governance helps to build that trust and provides a framework against which an organisation can be measured.
The FRC defines good governance for listed companies in the UK Corporate Governance Code 2018 (which also applies to Euronext Dublin listed companies) and large private firms in Wates Corporate Governance Principles. UK central government define good governance for their departments, and aspects of local authority governance are defined locally. The charity sector and the social housing sector also have a good governance code.
In my view, there are themes running through these and the following are key:
So how can I, as an Internal Auditor, contribute to helping my organisation implement and maintain good corporate governance?
First and foremost, I can seek to live the organisation’s values, demonstrate integrity and contribute positively to social corporate responsibility activities. Whether it’s going as far as climbing Everest for charity or recycling a plastic bottle.
In addition, as an auditor, I am perfectly placed to provide assurance over the organisation’s corporate governance activities through activities in the audit plan. Whether through dedicated audits or as part of all audits.
How will you make a positive contribution today to good governance?