ACCA backs FRC thumbs-up for Turnbull internal controls guidance
ACCA (the Association of Chartered Certified Accountants) supports the main conclusions of the Financial Reporting Council's review of the UK's long-standing Turnbull Guidance on Internal Control, which is published today.
The FRC's consultation paper concludes that Turnbull has been successful and that there is no need for major changes. The consultation period runs until 16 September 2005.
ACCA Chief Executive Allen Blewitt said "We welcome the news that the Turnbull guidance will continue to cover all internal controls, and not be limited to controls over financial reporting only. We agree with the FRC's review group that there is no need for the UK to follow the US approach of making companies issue annual statements regarding internal control effectiveness.
"ACCA believes that market pressure will lead to meaningful disclosures on internal controls - such as evaluation of different components of the control framework - rather than simple assertions of effectiveness, which a more regulatory approach might lead to. Auditors, however, should be robust in reporting if they think the directors' statements regarding actions needed to strengthen controls are inadequate or misleading."
During the forthcoming consultation period ACCA will encourage the review team to make risk management even more relevant to management decision making, particularly at board level. The final guidance should, in ACCA's view, recommend that risk be considered as part of strategy formation and that opportunity, or upside risk, should also be considered as part of risk management.
The consultation paper can be accessed at http://www.frc.org.uk/corporate/internalcontrol.cfm
Members wishing to contribute to the ACCA response to the consultation paper should contact Paul Moxey, ACCA Head of Corporate Governance and Risk Management at paul.moxey@accaglobal.com
The FRC's consultation paper concludes that Turnbull has been successful and that there is no need for major changes. The consultation period runs until 16 September 2005.
ACCA Chief Executive Allen Blewitt said "We welcome the news that the Turnbull guidance will continue to cover all internal controls, and not be limited to controls over financial reporting only. We agree with the FRC's review group that there is no need for the UK to follow the US approach of making companies issue annual statements regarding internal control effectiveness.
"ACCA believes that market pressure will lead to meaningful disclosures on internal controls - such as evaluation of different components of the control framework - rather than simple assertions of effectiveness, which a more regulatory approach might lead to. Auditors, however, should be robust in reporting if they think the directors' statements regarding actions needed to strengthen controls are inadequate or misleading."
During the forthcoming consultation period ACCA will encourage the review team to make risk management even more relevant to management decision making, particularly at board level. The final guidance should, in ACCA's view, recommend that risk be considered as part of strategy formation and that opportunity, or upside risk, should also be considered as part of risk management.
The consultation paper can be accessed at http://www.frc.org.uk/corporate/internalcontrol.cfm
Members wishing to contribute to the ACCA response to the consultation paper should contact Paul Moxey, ACCA Head of Corporate Governance and Risk Management at paul.moxey@accaglobal.com