Chairmen of the larger UK companies have missed the opportunity to steer corporate governance through their reporting to shareholders. A study by the accountancy firm Grant Thornton suggests that only one in 10 of the chairmen of the top 350 companies shed any genuine light on their companies' governance in the annual report. The new UK Corporate Governance Code, adopted in May 2010, called upon chairmen to "report personally" on corporate governance, rather than delegating the practice to, say, the company secretary. Moreover, the Financial Reporting Council March 2011 guidance on board effectiveness emphasised a need for the chairman's guidance and direction for the board. Grant Thornton said: "As old challenges are addressed, new ones emerge," and then listed several: - Gender bias: Seventy two per cent of companies do not discuss gender, with only 6 per cent measuring and describing their progress against gender quotas and 140 companies still having all-male boards
- Audit tenure: The average tenure of a FTSE 350 audit appointment is 34 years, with 248 companies making no mention of when they last tendered their external audit
- Internal control: Only 25 per cent of companies give real insight into how they review the effectiveness of their internal control systems
- Board evaluation: External board evaluations may have been embraced by nearly all companies, but only 24 per cent share the outputs of such evaluation
The report notes that the European Union is examining whether voluntary codes are really the best way to conduct corporate governance. "Our review suggests that the Code's 'comply or explain' approach has achieved significant success over the last ten years," it said. "But, as stakeholders and regulators call for more informed reporting, the bar will continue to rise. So, as guidance and practice evolve, companies and the audit committees must recalibrate their expectations."
Source document: The Grant Thornton review is a 33-page pdf file.
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