When Sir Donald Brydon issued his review of the UK audit industry in 2019, he highlighted the need for better reporting on the effectiveness of financial controls. In response to this, and other independent reviews, the government issued the white paper ‘Restoring trust in audit and corporate governance on 18 March 2021. It includes measures to enhance the quality of corporate governance, corporate reporting and internal controls. Interestingly, in our recent ‘Building Confidence’ podcast, Sir Jon Thompson, Chief Executive of the FRC, picked out a “UK version of Sarbanes Oxley” as his top priority – out of the 98 questions the paper set out.
We expect the guidance to come into effect in the next 2-5 years. That might seem like some way off – especially when there are pressing issues such as COVID-19 and Brexit to deal with. But our experience of embedding an UK SOx (internal controls) framework over financial reporting was that it can take a long time to implement (18-24 months at a minimum level). After all, it impacts all areas of your business, from finance and operations to IT, and many companies won’t have mature controls in place, let alone the potential assurance required on these controls once they are in.
It’s important to get it right. There are likely to be penalties and fines for directors where reporting doesn’t meet requirements. You could also sour market perception and investor relations if you’re not perceived to be in control.
But this isn’t just about compliance. These changes can support business to drive broader transformation activity by creating clearer accountabilities, more standardised ways of working and improved process (and control) ownership. All in all, better business and risk management.
We provide end-to-end support, from design and implementation all the way through to the ongoing management of your financial controls framework.
We help you: