High-quality input from non-executive directors is central to good corporate governance, CIMA told the Treasury committee inquiry into the financial regulation of public limited companies in the UK last month.
The institute recommended that a code of best practice for non-execs be developed by a group of relevant stakeholders. This would cover their roles, responsibilities, training, independence and the need to ensure that they had enough time to give a diligent, high-quality contribution.
CIMA's comments were part of a written and verbal submission to the inquiry, which was set up in February after the collapse of Enron. Bruce Epsley, CIMA's president; Richard Mallett, director of technical development; and Stathis Gould, head of technical issues, joined representatives of other accounting bodies to discuss ways in which financial regulation could be improved to reduce the risk of a similar business failure in the UK.
CIMA recommended that companies should be encouraged to widen the role of the audit committee to include a review of governance frameworks; that sound internal control systems and the value of internal audit should be reinforced; and that business risks should be systematically evaluated and managed transparently.
The need to ensure the independence of auditors from their clients was also raised, which echoed the sentiments of a recent paper from the Association of...