ICAS guidance on corporate governance
Discover ICAS guidance on corporate governance
ICAS has published a range of guidance on corporate governance matters to support directors in business and the public sector.
Topics include:
- Directors' duties.
- Auditor evaluation.
- Audit tendering.
- Exercising professional judgement in complex financial and corporate reporting decisions.
- Sharing international insights on audit committees.
ICAS has leveraged a wealth of insights and distilled good practice principles on various aspects of corporate governance which will be a valuable aid for boards.
Paul Hally, Chair of Business Policy Panel
For directors
1. Directors’ case studies - implementing section 172 duty to promote the success of the company
Board member CAs have shared a series of real life case studies to help illustrate application of the directors’ duty to promote the success of the company and the wider issues set out in the Companies Act section 172. These examples share the factors directors had to evaluate when making their decision and the principles applied to balance different needs and priorities.
Various scenarios are offered that individuals can tailor to their own circumstances including:
- managing cost reductions;
- investment decisions;
- managing assets at risk of default;
- supporting long-term success;
- managing challenges - internal (board dynamics) and external (public investigations);
- environmental impact.
This guide aims to help existing and potential directors, as well as shareholders/owners, to identify what they need to know, and where they need to look to find good practice on effective boards.
It offers practical considerations to help implementation and explains key aspects, including:
- dealing with business difficulties;
- appointing directors;
- what to expect from non-executives;
- compliance and risk management.
For non-executives, factors for consideration on whether to accept a board appointment are outlined as well as information on what they can expect from the business to help fulfill their role.
Key themes for boards today are reviewed with additional guidance on areas such as building trust, board culture, sustainability, ethics and values and board evaluation.
For audit committees and directors
Select from two guides which aim to help audit committee members or board directors share good practice on:
-Auditor evaluation for private companies (SMEs)
-Auditor evaluation for publicly funded, third sector and not-for-profit bodies
Regular evaluation of the auditor’s performance helps to ensure that you get the service needed for your organisation. The guidance clarifies what to expect from a good quality audit, key principles and organisational benefits.
It explains how to approach the evaluation, frequency and sets out the issues to consider when engaging non-audit services. A detailed checklist is provided to guide audit committee members through the evaluation process.
For public sector organisations which use a national framework where the auditor is appointed centrally, it is still important to actively review your auditor to enable two-way sharing of information and increase confidence in the quality of service. The guidance is tailored to the public/not-for-profit sector context.
These ICAS guides provide useful insights and are a valuable resource for good practice corporate governance in the public sector.
Gordon Smail, Chair of Public Sector Panel
4. Audit tendering – selecting your auditor
Select from three guides on audit tendering which tailor good practice to the sector you are interested in:
-Selecting an auditor in the public sector
-Audit tendering for directors of private companies
-Audit tendering for public interest entities.
These tailored guides distil the key factors of good practice into a more accessible and practical form for different organisations.
They explain:
- benefits of audit tendering;
- trigger points for retendering;
- risks of not rotating on a regular basis;
- tender process, key assessment criteria;
- tips on how to get the quality audit you need.
Each guide also includes a checklist to take you through the process from planning to assessing final auditor presentations.
For publicly funded bodies, whatever the tender framework, periodically reassessing and challenging what is an appropriate frequency for tendering to balance independence and maximise efficiency is beneficial. Even where a national tendering framework is used, as organisations are paying for and benefiting from the audit, it is in their interest to engage actively in the process promoting audit quality to obtain the quality needed. Tips on achieving “quality first at a fair price” are offered.
An important element of effective governance is a strong audit committee (or equivalent); this guide explains the principles of audit quality and responsibilities in a public/not-for-profit sector context.
5. Making professional judgements - financial and narrative reporting
The professional judgement framework provides a structure which aims to help you come to a sound judgement when you have a complex financial or narrative reporting decision to make.
This framework is applicable across any sector and is aimed at auditors, preparers, audit committee member or regulators. It can also be used to support training.
6. Insights from audit committee chairs
ICAS and Chartered Accountants Australia and New Zealand (CAANZ) have published a report sharing insights from interviews with audit committee chairs and a roundtable discussion with key stakeholders which aims to share international perspectives and best practice.
Find out more about insights from audit committee chairs.
