Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Essay:
" This project is considered to be the first major update to the Smith Guidance. It was felt that the update was required to shore up some of the deficiencies in the Smith Guidance that have emerged since it was published. There were characteristics of the market that it was felt needed to be addressed, in particular the oligopolistic nature, which exposed the market to considerable uncertainty in the event of a failure of one of the Big Four (FRC, 2008). This report remains a work in progress at this time.
One company that has been impacted by the changes brought about by the Combined Code is oil services firm Lamprell. The company joined the London Stock Exchange in early 2008 and was immediately required to make changes to its governance structure in order to comply with the Combined Code. The company needed to make several changes to its traditional Board structure. The first was that it needed bring in several new independent non-executive directors. Lamprell also needed to split the roles of chief executive and chairman (Bland, 2008).
In September 2008 Lamprell moved closer to Combined Code compliance by adopting a Policy on External Auditor Independence. The company's policy states that they will not use auditors for non-auditing services unless such services do not conflict with the auditor's independence (Lamprell, 2008). The external auditor must be independent of the company both in fact and in appearance. The policy specifies a wide variety of situations that would be interpreted to compromise auditor independence, and lays out ground rules for hiring auditors. All of these moves were new to the company, a consequence of listing on the LSE.
When the Combined Code was implemented, many UK firms were thus obligated to make changes to their corporate governance programs. One such company was Reed Elsevier, a content provider. This company has a strong Netherlands presence and was forced to comply with the Dutch corporate governance codes as well. Reed Elsevier's board, based in the Netherlands, was presented in 2005 with the need to improve their governance measures, to bring them in line with the Combined Code.
Ultimately, the changes enacted by the company were in compliance with the Combined Code, rather than the Dutch code. However, the company could have opted out of the Combined Code had it so desired, by taking advantage of the Code's "comply or explain" philosophy. The situation is an interesting parallel to the experience of British firms that evacuated the U.S. markets as a result of SOX, in that they could have opted out of the Combined Code if they complied with SOX, but the added expense of the American regulation negated any desire to take such action. Likewise, the Reed Elsevier experience also favoured the Combined Code vs. The Dutch regulations.
Among the changes enacted as a result of compliance with the Combined Code was the creation of an audit committee comprised of all independent non-executives. Another initiative was the establishment of a remuneration committee, again comprise of independent non-directors. The company had become cognizant of the corporate governance issues in the UK, and reacted accordingly.
The Combined Code is subject to frequent evaluation and update. While the results of recent studies and audits have found the Combined Code to function effectively, there is no particular reason why this should be the case. The Combined Code is a system based on principles rather than rules. Thus, enforcement capabilities are limited. Indeed, some recent studies have shown as few as 33% of LSE-listed firms adhere to the Combined Code in its strictest sense.
There are several ways in which the current UK corporate governance model can fall down. These include having a dominant CEO, having an ineffective or incompetent board, deliberate distortions of published financial figures, and employees who exploit their positions for personal gain. These are precisely the scenarios that led to many of the governance problems that provided the impetus for the Combined Code in the first place.
With the Financial Reporting Committee organizing another evaluation of the Combined Code for 2009, it is not expected that any significant changes are going to be made. The FRC is content with the current system, as is the business community in the UK. The currency system has all the right rules on the books, but because they are not mandatory, firms are not obliged to fulfill each and every component of the Combined Code.
However, it is fully reasonable to expect that the impetus for change will come as it has before, at the conclusion of a crisis. The Cadbury Report was precipitated by a crisis, as was the flurry of reports in the early 2000s. The corporate community in the UK prefers their version of corporate governance rules because they appear to be equally effective but without high cost. The London Stock Exchange certainly views the Combined Code as an advantage because it provides the LSE with a competitive advantage over New York and the SOX.
The Financial Reporting Committee's current work on updating the Smith Guidance is unlikely to yield any major changes to the role of auditors. The industry is heavily involved in the process. Additionally, the mandate of the updates does not speak directly to the role of auditors, but more towards how the market can be made to function better.
When the time comes -- when another crisis forces the Financial Reporting Committee into action -- the role of external auditor will again be called into question. The last ten years have seen the evolving of the Combined Code, which has resulted in a wide range of changes to the external auditing industry. Another crisis will likely result in a tightening of regulations, such that external auditors will no longer be able to do any non-auditing work for companies. Other than that, there is little indication that any regulatory changes will be made. There are definitely issues with the current version of the Combined Code -- as noted above -- but there is little if any impetus to address any of these issues, and there will not be as long as the London Stock Exchange gains competitive advantage for its low-cost governance program.
The Committee on Financial Aspects of Corporate Governance and Gee & Co, Ltd. (1992). The Financial Aspects of Corporate Governance. Retrieved April 8, 2009 from http://www.ecgi.org/codes/documents/cadbury.pdf
The Committee on Corporate Governance. (1998). Final Report. Retrieved April 8, 2009 from http://www.ecgi.org/codes/documents/hampel.pdf
Financial Reporting Council. (2005). Internal Control: Revised Guidance for Directors on the Combined Code. Retrieved April 8, 2009 from http://www.frc.org.uk/documents/pagemanager/frc/Revised%20Turnbull%20Guidance%20October%202005.pdf
Deloitte & Touche. (2004). Report on the impact of Director's Remuneration Report Regulations. Retrieved April 8, 2008 from http://www.berr.gov.uk/files/file13425.pdf
Madigan, Peter. (2007). ICI delisting ends bad month for U.S. markets. OpRisk & Compliance. Retrieved April 8, 2009 from http://www.opriskandcompliance.com/public/showPage.html?page=449267
Financial Reporting Council. (2005). Guidance on Audit Committees (the Smith Guidance). Retrieved April 8, 2009 from http://www.frc.org.uk/documents/pagemanager/frc/Smith%20Report%202005.pdf
Financial Reporting Council. (2006). The UK Approach to Corporate Governance. Retrieved April 8, 2009 from http://www.frc.org.uk/documents/pagemanager/frc/FRC%20The%20UK%20Approach%20to%20Corporate%20Governance%20final.pdf
Financial Reporting Council. (2009). 2009 Review of the Combined Code. Retrieved April 8, 2009 from http://www.frc.org.uk/corporate/reviewCombined.cfm
Financial Reporting Council. (2008). The Combined Code on Corporate Governance: June 2008. Retrieved April 8, 2009 from http://www.frc.org.uk/documents/pagemanager/frc/Combined_Code_June_2008/Combined%20Code%20Web%20Optimized%20June%202008(2).pdf
Bland, Ben. (2008). Cadbury Schweppes could make tasty target. The Telegraph. Retrieved April 8, 2009 from http://www.telegraph.co.uk/finance/markets/marketreport/2784392/Cadbury-Schweppes-could-make-tasty-target.html
Lamprell. (2008). Policy on External Auditor Independence. Retrieved April 8, 2009 from http://www.lamprell.com/lamprell/storage/docs/Policy_on_auditor.pdf
No author. (2008). Compliance with the Combined Code. Reed Elsevier. Retrieved April 8, 2009 from http://www.reed-elsevier.com/investorcentre/corporatestructure/Pages/CompliancewithCombinedCode.aspx
Ojo, Marianne. (2006). The Role of the External Auditor in UK Bank Regulation and Supervision. University of Munich. Retrieved April 11, 2009 from http://mpra.ub.uni-muenchen.de/6828/1/MPRA_paper_6828.pdf
No author. (2009). ICAS Code of Ethics. ICAS. Retrieved April 11, 2009 from http://www.icas.org.uk/site/cms/contentviewarticle.asp?article=4830
No author. (2006). Background to the APB Ethical Standards issued in 2004. ICAEW. Retrieved April 11, 2008 from http://www.icaew.com/index.cfm/route/122993/icaew_ga/en/Technical_and_Business_Topics/Topics/Ethics/Background_to_the_APB_Ethical_Standards_issued_in_2004
Groom, Michael. (2002). Corporate Governance -- the Role of Financial Reporting and Auditing in Good Corporate Governance. IFAC. Retrieved April 11, 2009 from http://www.ifac.org/mediacenter/?q=node/view/290
No author. (2008). Choice in the UK Audit Market. FRC. Retrieved April 11, 2009 from http://www.frc.org.uk/documents/pagemanager/frc/FRC%20Update%20Choice%20May%202008%208%20May.pdf[continue]
"External Auditing UK Modern Corporations" (2009, April 08) Retrieved October 23, 2016, from http://www.paperdue.com/essay/external-auditing-uk-modern-corporations-23149
"External Auditing UK Modern Corporations" 08 April 2009. Web.23 October. 2016. <http://www.paperdue.com/essay/external-auditing-uk-modern-corporations-23149>
"External Auditing UK Modern Corporations", 08 April 2009, Accessed.23 October. 2016, http://www.paperdue.com/essay/external-auditing-uk-modern-corporations-23149
However, there has also been hesitation within government to challenge auditors too aggressively. Because accounting scandals have the power to wipe out a major auditing firm, there is considerable sentiment that the existing industry structure needs to be protected, and that all four major firms should be kept from significant scrutiny, lest one of them collapse, ruining competition in the industry. Already the rapid acceleration of audit fees indicates oligopolistic
The panels could also be assembled quickly often within a day. Some panels have an in-built wiring in them making the housing construction to be faster. The panelized off-site building technologies could also involve exterior wall of building designed to provide the load bearing structural support, and the panelized building system could be made of light gauge steel, timber, structural insulated panels (SIPs), non-structural or concrete, which could be
Operational issues of IT Department NHS Organization UK The objective of this report is to provide a proposal to reduce the IT operational costs. National Health Service (NHS) is a biggest healthcare service provider in the UK, and the organization delivers both primary and secondary healthcare since its formation. The UK government major objective for forming NHS is to provide the affordable and quality healthcare delivery for all social class in the
Threat of substitute products Given the dynamic retailing environment, the threat of substitute products is fairly intense. Customers normally shop at large corporate retailers, but their loyalty levels are often unstable. In such a context then, the retailers -- including Marks and Spencer -- have difficulties in retaining their customers and preventing competitive items from replacing their own products (Dalic, 2004). Competitive rivalry Last, in the environment that has already been described, the
International expansion is one of the growth strategies that are embraced by companies in order to improve their bottom-line/profitability. In this paper, we present an elaborate international marketing strategy for Red Bull energy drink. The marketing plan begins with an introduction into the concept of international expansion and marketing and a brief overview of the company. A review of the main conclusions and recommendations is then presented. This is then
Enron could engage in their derivative trading strategy with no fear of government intervention because derivative trading was specifically exempted from government regulation. Due in part to a ruling by the Commodity Futures Trading Commission's (CFTC) chairwoman, Wendy Graham, derivatives remained free of regulatory oversight. Ms. Graham, wife of Texas senator Phil Graham, made this ruling 5 weeks before resigning as chairwoman of the CFTC and joining the Enron Board
In contrast, within the firm, the entrepreneur directs production and coordinates without intervention of a price mechanism; but, if production is regulated by price movements, production could be carried on without any organization at all, well might we ask, why is there any organization?" (Coase, 1937, p. 387) In simpler words if markets are so efficient why do firms exist? Coase explains, "the operation of a market costs something