Audit, risk and internal control

Effective audit, risk management and internal control are each an important aspect of corporate governance. It is thought that the successful development and delivery of a company’s strategic objectives, as well as its ability to take advantage of new opportunities and secure its long term survival, depend upon it being able to properly identify, understand and respond to the risks it faces.

A company with a listing of equity shares in the equity shares (commercial companies) category should have regard to the principles and provisions of the UK Corporate Governance Code (UKCG Code) concerning audit, risk management and internal control. Its shareholders may also wish to consider the Guidance on Risk Management and Internal Control and Related Financial and Business Reporting (the Risk Guidance).

The UKCG Code and the Risk Guidance are each administered by the Financial Reporting Council (FRC). The principles and provisions of the UKCG Code are supported by best practice guidelines, some published by the FRC itself and some by independent bodies, such as the Chartered Governance Institute (CGI).