Effectively applying the Corporate Governance Code Principles is much more important than a ‘tick box approach: The Professional Accountant Assignment, USF, UK

Task

Part 1

“Effectively applying the Corporate Governance Code Principles is much more important than a ‘tick box approach”. Our assessments of reports this year now give us an evidence base to drive forward better-quality reporting. This is essential if investors and other stakeholders are to evaluate the quality of governance effectively.

• Discuss the extent to which the UK listed companies are looking for a high standard of Corporate Governance reporting which demonstrates that boards had considered substance and quality compliance beyond a ‘tick box approach?

Part 2

“Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.’ This remains true today, but the environment in which companies, their shareholders, and wider stakeholders operate continues… Nevertheless, the debate about the nature and extent of the framework has intensified as a result of financial crises and high-profile examples of inadequate governance and misconduct, which have led to poor outcomes for a wide range of stakeholders. At the heart of this Code is an updated set of Principles that emphasize to develop rapidly.’

However, an alternative description is that “…. too often companies who are not compliant with the Code, do not declare non-compliance but offer vague explanations, and continue this pattern year on year.”

• Discuss why a listed company disregard implementing good practice, and critically evaluate whether the leadership of the company is fully committed to good governance and transparency. What actions it must take to mitigate the impact of not following the Code?

Part 3

Since the UK Code of Corporate Governance was updated in 2018 there have been more major failings in how some large companies in the UK are managed. In 2020, FRC was surprised that in many cases corporate governance reporting was not coherent and cohesive. For example, many companies stated the importance of diversity and diverse boards but offered little explanation in the way of evidence to support their assertions, including a lack of targets to improve diversity at the board and executive committee levels.

• Looking at how other countries manage this area of coherent and cohesive compliance; how do you think the UK system could be improved? Again, use examples to support your case?

Aims

• To develop advanced skills and professional judgment in analyzing and evaluating the specific responsibility of the accountant in relation to ethics, sustainability, innovation, internal control, governance, compliance, and risk management in a range of international accounting environments.
• To evaluate governance and its role in the effective management and control of businesses
• To evaluate the Governance, Risk, and Ethics’ role in internal control, review, and compliance
• And the role of the accountant in identifying and mitigating assessing risk
• To evaluate the application of professional values and judgment

Answer

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