Corporate Governance

The Combined Code states that:

“Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance”

The need for effective governance has been demonstrated by various high profile business collapses in the private sector, including the banking sector, and a number of organisational incidents in the UK public sector. The debate around corporate governance has evolved since the mid 1980’s and is summarised in our document “Corporate Governance in the UK - Overview”. Clearly setting the standard at governing body level is important. An effective risk management framework which is thoroughly embedded throughout the institution will enable the governing body and the senior management team to be able to demonstrate the effectiveness of governance arrangements on a continuous basis.

As Internal Auditors, we seek to align our work to this framework providing the necessary assurances to management that established processes and procedures are in place and operating effectively and can be relied upon.

We have a vital role to play in the governance framework within an institution, as the following diagram indicates:

In addition, the KCG Consortium is experienced in carrying out reviews of the corporate governance framework including effectiveness of the governing body and associated committees, effectiveness of strategic and operational management processes, and reviews of more detailed aspects of the corporate governance framework including the development and use of Key Performance Indicators (KPIs).