Beyond compliance: UK’s FRC calls for deeper insight in corporate governance reporting
The FRC has published its 2023 Annual Review of Corporate Governance Reporting which highlights a need for UK companies to enhance their corporate governance reporting, particularly in risk management and internal controls. Despite notable strides in transparency, many firms still fall short of providing the clear, detailed disclosures stakeholders expect.
The Financial Reporting Council's (FRC) latest Annual Review of Corporate Governance Reporting casts a discerning eye over the current state of corporate governance reporting practices in the UK. Whilst commending the ongoing improvements in the overall quality of reporting, the regulator highlights the persistence of some major deficiencies in key areas like risk management and internal controls reporting.
The report celebrates instances of high-quality and insightful reporting, where companies exhibit transparency and go beyond mere compliance with the UK Corporate Governance Code. However, the FRC notes that such cases are exceptions rather than the norm, and many companies still provide limited explanations that lack clarity and fail to consistently meet a high standard of reporting.
Particularly concerning is the finding that many companies resort to boilerplate reporting. This generic approach misses the mark in providing stakeholders with meaningful explanations that would demonstrate how alternative governance arrangements benefit both the company and its shareholders. Such reporting often overlooks the necessity of articulating the specifics of critical areas like risk assessments and internal controls. The FRC highlights the need for companies to increase attention and improve their ability to demonstrate robust systems, governance and oversight.
According to FRC, good corporate governance reporting should entail a detailed description of the review process, the outcomes, and the actions taken to address any identified weaknesses. This is not just about adhering to the Code but also about fostering stakeholder trust through transparency and accountability.
In the context of these findings, solutions like Cygnetise's signatory management application become increasingly relevant. Such applications enable organisations to streamline their adherence to internal risk controls and maintain effective reporting on corporate responsibilities and authorisations. With an emphasis on clear documentation and verification processes, tools like Cygnetise can bolster the governance framework, facilitating better compliance with the FRC's reporting standards.
The FRC acknowledges the strides made in workforce engagement and stakeholder reporting but urges companies to reflect more deeply on the feedback received and its impact on board decisions. In the words of Mark Babington, FRC Executive Director of Regulatory Standards, while the progress made by some is commendable, there is a pressing need for more comprehensive and insightful disclosures across the board to meet stakeholder expectations and embody the Code's principles fully.
For companies, this means not just ticking boxes but undertaking a genuine exercise in building trust and understanding through good corporate governance disclosures. The FRC's report is a call to action, underscoring the imperative for companies to elevate their governance reporting to a level that not only complies with regulations but also conveys the true spirit of effective corporate stewardship.
How can Cygnetise enhance corporate governance?
In the wake of the FRC's call for more robust corporate governance reporting, Cygnetise's innovative application emerges as a solution to streamline and secure the management of authorised signatory lists within organisations. By digitising this crucial process, Cygnetise not only increases security and efficiency but also provides a real-time updating system, ensuring that the most current signatory data records are always at hand. This technology is a game-changer for organisations looking to save administrative costs, significantly reduce time spent on signatory management, and mitigate the risk of fraud.
Cygnetise’s application offers five key enhancements to corporate governance compliance:
Real-time management: Users can manage, share, and update signatory data instantly, ensuring all changes are reflected immediately across the platform.
Single source of truth: Maintaining one authoritative version of signatory lists eliminates inconsistencies and the perennial challenge of outdated information.
Instant remote access: Stakeholders have immediate access to the latest signatory data entry, no matter where they are, facilitating global operations and decision-making.
Historical records: A comprehensive log of all signatory data changes is kept, providing valuable historical insight and an audit trail for compliance purposes.
Standardised processes: Cygnetise helps develop a sufficiently standardised procedure across all functions and entities, which is particularly beneficial for multinational corporations with multiple entities and accounts dealing with various regulatory mandates.
With Cygnetise, companies can enhance their governance frameworks, align with the FRC's guidelines, and meet stakeholder expectations for transparent and effective corporate governance.