A result of government-ordered reviews following high-profile company collapses, the changes will update the UK’s Corporate Governance Code, Reuters reports.
While the government is unlikely to impose regulatory change as tough as that legislated in the US in 2002 under the Sarbanes Oxley Act, following the collapse of Enron, Reuters reports that the proposals ‘toughen’ the requirements around statements boards must make about internal controls.
While currently, boards are required to simply state in annual reports whether they have established internal controls effectively, the proposal would add a requirement to assess whether internal controls have been maintained and explain the conclusion reached.
Reuters also reports that the proposals would also expand the number of companies that need to comply with the Code.
