P5 Influence of external bodies on governance 1.3

  • Created by: mumuna
  • Created on: 21-05-13 13:26

Stakeholder inc. shareholder activism

influence the organisation  and are influenced by the organisation.  Internal include staff , managers, the board

External include shareholders, customers, competitors, trade unions, suppliers, government, local government, regulators

Those on perifery - general public and interest groups 

Shareholder Activitism - increase their presence raised when things go wrong - esp since credit crisis.  Their goal are financial or non-financial e.g link to CSR, thus more ethic> also mechanism of dialogue and formal shareholder resolutions

Shareholder main check and balances in corporate governance under comply and explain and regulation basis e.g. shareholder of Veleo voted against £3+ million parachute for former executive chairman

DEVELOPMENT OF STEWARDSHIP CODE - BCKGRD Walker review conclude increased interest from stakeholder do more to stop credit crisis. CODE aim to increase involvement of institutional investors as criteria to talk to, rather than regulation

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External Bodies - Regulatory Pt 1

Since 1 April 2013  3 new bodies - FSA heavily criticised for failing to supervise banks effectively. Follow plans announce by Chancellor - giveing more powers to Bof E

Bank of England - responsible for monetary policy and contribute to effect the stability of the financial system

Financial Policy Committee - macro prudential regulation. Done by identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. The FPC has a secondary objective to support the economic policy of the Government.

Prudential Regulations Committee - micro prudential regulation - supervising banks and other financial institutions part of Bof E 

Financial Conduct Authority - protect consumers and promote confidence in intergrity and efficiency of UK markets e.g payday loan replaces the FSA with more active supervision approach

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External Bodies - Regulatory Pt 2

Financial Reporting Council - independent regulator strengthening and promoting confidence in corporate reporting and governance in UK


encouraging and promoting integrity, competence and transparenc of accounting and actuarial professions

exercise function in pursuit of high stds inlcude statutory oversight of (external) auditors

maintain efffective corporate governance code - ensure guidance relevan and current

influence EU and global CG developments

subsidary boards inlcuded Committee on CG, accounting std board and auditing practices board who issue stds for EA.

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External Bodies - Regulatory pt 3

Dept for Business Innovation and Skils 

1 - investigate beh that harms business through its regulatory arm - Companies Investigation Branch powers under companies Act 2006

2 - lead reform agenda  thru BETTER REGULATION EXECUTIVE. Working with:

  • dept to improve design of new reges and how comply
  • dept + regulators to simplifiy & modernise existing regs
  • regulators (includ LAs) to change attitudes and regulatory approach to be more risk based
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External Bodies - Public Pt 1

HM Treasury 

UK economics and finance ministry

Responsible for formulating and implementing govt finance and economic policy  - aim to raise rate of sustainable growth and better quality life for all

Key role to achieve high standard of regularity, propriety and accountability in public finance

regarding CG key role in encouraging the appropriate manage of government finance - under resource and acocunt act 2000 there is appointment of accounting officers at each dept inlcuding those are executive agencies and NDPB they sponsor

AO est and document allocation of responsiblity amongst official for effective CG. But AO ultimate responsibility and accountable to parliament for:

  • properiety and regularity
  • product and economic administration/ avoidance of waste and extravagence
  • efficient and effective use of available resource
  • organisation, staffing and manageme of dept.
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External Bodies - NAO Pt 2

Main auditor for Uk central government - independedn parliamentary body auditing dept, their agencies and NDPBs

Reports to Comptroller and Auditor General in turn reports to Committee of Public Accounts

financial audit role, NAO required form opinion on accounts:

1. whether free from material misstatements

2. confirm that tranaction have appropriate parliamentary authority

If material misstatements - Comptroller ang AG will issue qualified opinon and prepare report. Where no material errors of irregularies - may be prepared to Parliament on other significant matters which can be considered by Committee.

If not report NAO, where ok, issue letter to mgmt outcome where improvement could be

NAO carried vfm audits - economic, efficiencty and effectivness - into admin of public policy. Devolved admin own arrangements

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voluntary and not-for-profit

Orgs regulated by bodies set by governmetn

Home and Communities Agency is a NDPB. Statutory funcitns in Housing ang Regeneration Act 2008 aim to:

  • improve supply and quality housing in England 
  • secure regeneration on development of land or infustrature
  • support other way to regenerate and develop communitie  or continued well-being
  • contribute to achievement of sustainable development

Charity Commission regulator whoprovide service and guidance to help them operate effective. 

Aim to protect public interest, with statutory objective to ensure charities comply with legal requirements, taking a risk based approach with strategy in 3 areas:

  • response on fraud financial crime, financial abuse
  • response on safeguarding children and vulnerable adults
  • counter terroism
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