Financial Reporting and Ethics - The Institute of Chartered ...

CORPORATE GOVERNANCE(a)(b)Greenbury ReportThe Greenbury Committee came into being as a reaction to continuingpublic agitation against the excessive remuneration and perquisiteswhich directors are paying themselves, out of tune with the operatingand financial fortune of companies, and the failure to make adequatedisclosure about the former. The Greenbury Committee’s recommendationson directors’ remuneration have since been included in the ListingRequirements of the London Stock Exchange.Turnbull ReportThe main clamour in this report is the institution of efficient and effectivesystem of internal control and its continual review and appraisal. Thereport, advocates very strongly that a company’s assets andshareholders’ interests should be well safeguarded. The review activityshould embrace all controls - administration, security, financial,accounting and risk management. The London Stock Exchange includesthe installation and nurture of sound internal control system asventilated in the Combined Code in the Listing Requirements of newcompanies.Indeed, provision D.2.1 of the Combined Code states that “The directorsshould at least annually, conduct a review of the effectiveness of thegroups’ system of internal control and report to shareholders that theyhave done so.”(c)(d)Cadbury ReportThis Committee was set up to address the lack of public confidence inthe financial reports rendered by boards of companies and the abilityof the auditors to attest to their credibility. The reservation held by thepublic is borne out of the perceived relationship between the boards ofdirectors and auditors.Hampel ReportThe report centred generally on bringing improvement to bear oncorporate governance. It restricted the regulatory commitment to complywith on companies. The London Stock Exchange considered the reportof the Committee and subsequently published what is known as the‘Combined Code.’In the United States of America and United Kingdom, political fervour is thereto revolutionise corporate governance in theory and practice, through improvedlegislation. However, it has to be admitted that the pre-requisites on the partof every board member and management are self-regulation and personalvirtues, for pragmatic and near flawless corporate governance to manifest.225