Implementing robust controls over financial reporting enhances trust in business and improves reporting quality. The UK already has requirements in this area but there is widespread agreement that they are not sufficient.
Research and evidence from the United States demonstrates that the US Sarbanes-Oxley Act has strengthened the capital markets and the reliability of financial reporting there. It also suggests that assurance over management’s assessments of the internal control environment within listed companies has benefits for investors and for the company itself.
In his Review of the Quality and Effectiveness of Audit, Sir Donald Brydon acknowledged that the effectiveness of internal controls is fundamental to the reliability of a company’s financial (and potentially other) reporting. Sir Donald recommended that a CEO/CFO attestation should be introduced supported by principles developed by the Audit Committee Chairs’ Independent Forum (ACCIF) and endorsed by the new financial reporting regulator.
KPMG hosted a roundtable discussion in November 2020 with investors and analysts to discuss this recommendation. At this roundtable, the discussion centred on five key questions.
A summary of the discussion can be found here.
Our roundtable discussion on the effectiveness of UK internal controls was held on 4 November 2020. It is one of a series of investor outreach events where we discuss and share perspectives on how corporate reporting, auditing and assurance, and stewardship can evolve to meet investors’ needs today and in the future. To find out more, visit our web page or follow KPMG Investor Insights on LinkedIn. If you would like to discuss any of the areas in more detail on a one-to one basis, contact us.