This is the fourth of five pieces from an internal audit perspective on the 2018 UK Corporate Governance Code: Non-Executive Recruitment (1), Viability Statements (2), Audit Committee Effectiveness (3), Culture (4) and the Workforce Voice (5).
Culture is never far from the headlines. Two select committees found “the problems that caused the collapse of Carillion were long in the making, as too was the rotten corporate culture that allowed them to occur.” And despite winning awards for its entrepreneurial culture, Google has admitted to issues of a ‘bro-culture’ as global employees protested the treatment of women.
This piece focuses on the governance requirements related to corporate culture. It encourages audit leaders to think about the importance of culture assurance and the plethora of guidance that is available.
|RECAP. On 16 July 2018 the Financial Reporting Council (FRC) published its long awaited update to the UK Corporate Governance Code together with revised Guidance on Board Effectiveness. The new Code applies for reporting periods starting on or after 1 January 2019.
The 2018 revisions support the government’s vision of restoring trust in the corporate organisations and the broader social reform agenda which aims to improve the standard of living and quality of life for ordinary working people.
The Code leaves no room for ambiguity stating that “a company’s culture should promote integrity and openness, value diversity and be responsive to the views of shareholders and wider stakeholders.”
Across the two documents, the Code and Board Effectiveness, culture is mentioned over forty times. It is difficult to think of a single more influential element of good governance, making it of critical importance for internal audit.
The theory behind culture and why it’s so important is explained in an audit leaders thought piece.
Principles and Provisions
There are specific requirements detailed i…