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31 October 2016 by Peter Swabey

All feedback is welcome - read more

The minute taking guidance continues to be popular, says Peter Swabey

In my last column, I commented on the announcement by the BEIS Committee of an inquiry into corporate governance. I also asked for members’ views on the issues raised and am grateful to those who shared their thoughts. As befits ICSA: The Governance Institute, we have been giving a great deal of thought to these issues and are working on some ideas on the future of governance. We have included some elements of that thinking in our response to the BEIS Committee, which are outlined in this month's article, 'No Simple Solutions'.

In addition to work on this response, the policy team has been working on preparations for the ICSA Awards, which will take place on 29 November – it will be a great evening. You can book your tickets on the ICSA website. One major area of focus for the awards is, of course, corporate reporting and as I draft this article, the FRC’s annual review of corporate reporting was published.

This is an interesting document and identifies ‘nine characteristics of good corporate reporting’ which I believe are worth sharing as they reflect a number of the comments made during judging of the awards:

  • A single story – ensure that the narrative report is consistent with the accounts
  • How the money is made – explain the business model clearly: what does the company do to make money
  • What worries the board – are the risks and uncertainties described in the strategic report actually the things that cause the board sleepless nights, and why this is the case?
  • Consistency – there is a lot of use of non-GAAP measures. These should be clearly reconciled to the relevant figures in the accounts and adjustments, and the need for them clearly explained
  • Cut the clutter – focus in what is important, avoid immaterial detail and unnecessary repetition
  • Clarity – use simple and precise language and explain complex accounting and reporting issues clearly, without jargon or boilerplate statements
  • Summarise – report items at an appropriate level of aggregation which is consistent with the narrative
  • Explain change – are significant changes from the prior period, whether matters of policy or presentation, clearly explained?
  • True and fair – follow the spirit as well as the letter of accounting standards with open and honest reporting. It is surprising how often even a lay reader of accounts will find themselves saying ‘they have not mentioned…’.

The charity world is also looking at its governance arrangements. This is nothing new, and is not a surprise following the negative media stories the sector has attracted. We looked at charity governance in a roundtable earlier this year and, although the system might not be broken, it is in need of a good service.

Trustees Week (7–11 November) provides the sector with an opportunity to redefine what a good trustee looks like, and ICSA will be fully involved in promoting the support available to the almost one million trustees of registered charities in England and Wales leading and governing the sector.

Trustees Week also sees the launch of the public consultation of the revised code of governance for charities. The policy team has been closely involved in this development and we will welcome the views of members as to whether the draft proposals set an appropriate standard for charity governance for the next decade.

We have also been working on guidance notes, with new publications on board evaluation for charities and multi-academy trust governance now available from our website. The minute taking guidance note continues to be very popular – I have a number of bookings to present the results of our work.

Finally, and again on reporting, the FRC published advice to audit committee chairs and finance directors of listed companies on 11 October. It identifies issues that it believes could be handled better in next years’ report and accounts. Surprisingly, this was not sent to the company secretary, who will generally have primary responsibility for the narrative part of the annual report.

Again, there are a number of helpful observations, which were covered in more detail in our technical briefing to members sent on 20 October. We hope that you find these fortnightly technical briefings useful – if you do not receive them, please sign up in the MyICSA area of the website. Any feedback would be welcome if you contact us

Peter Swabey is Policy and Research Director at ICSA: The Governance Institute

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