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ACCA consults on corporate governance

  • ACCA (UK Association of Chartered Certified Accountants) (lt green) Image

12 Mar 2014

The Association of Chartered Certified Accountants (ACCA) has published a consultation paper (“the consultation paper”) examining whether existing governance and risk management frameworks are “fit for purpose”.

The ACCA argue that corporate governance is about creating value and that “governance codes should be evaluated on how well they facilitate the creation of value”.  The consultation paper, ‘Creating value through governance – towards a new accountability’ considers whether corporate governance is actually helping businesses to create value and suggests that “reform” of the current approach to corporate governance and risk management is needed.  The ACCA comment: 

A fundamental rethink is required about how corporate governance and risk management contribute to creating value.  In losing its real purpose, governance has too often become about no more than compliance with structures and practices.   

The consultation paper proposes a new accountability framework based upon three components; ‘performing, informing and holding to account’; three complimentary components which can help companies perform in the interests of shareholders and wider society and which “are essential if a company is to create value sustainably”.  The consultation paper, which suggests that the three components are “not working well” highlights that the effectiveness of national governance codes and company approaches to governance in contributing to value creation can be assessed using this framework.           

The consultation seeks responses by 31 August 2014 and asks eight key questions including: 

  • Has corporate governance become too focused on form and compliance at the expense of the quality and integrity of decision making?
  • Should creating sustainable value be the overarching purpose of governance?
  • Do you find the framework likely to help to improve corporate governance and help focus companies on creating sustainable value?
  • Which of the three areas, performing, informing and holding to account, is the most problematic? 

The ACCA intends to publish a follow up paper on the subject of governance and value creation based upon the responses received. 

Click for:

  • Press release (link to ACCA website).
  • ACCA report Creating value through governance – towards a new accountability (link to ACCA website - including links to videos about the consultation and other related links).

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