Guidance on risk management, internal control and financial and business reporting

In the 2024 revision of the UK Corporate Governance Code, the Guidance on Audit Committees, Guidance on Board Effectiveness, and Guidance on Risk Management Internal Controls and Related Financial Business have been combined in the 2024 Code Guidance.

• Guidance on Risk Management and Internal Control and Related Financial and Business Reporting

Guidance published by the FRC on 17 September 2014, as announced in the press release FRC updates UK Corporate Governance Code.

The guidance 'aims to bring together elements of best practice for risk management; prompt boards to consider how to discharge their responsibilities in relation to the existing and emerging principal risks faced by the company; reflect sound business practice, whereby risk management and internal control are embedded in the business process by which a company pursues its objectives; and highlight related reporting responsibilities.'

It is primarily directed at companies subject to the UK Corporate Governance Code and applies to such companies for accounting periods beginning on or after
1 October 2014.

• Guidance on the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity Risks

Guidance published by the FRC on 18 April 2016, as announced in their press release.

This guidance is aimed at directors of companies not applying the UK Corporate Governance Code. It replaces the FRC ’s ‘Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009’ and ‘An Update for Directors of Companies that Adopt the Financial Reporting Standard for Smaller Entities (FRSSE): Going Concern and Financial Reporting’.

The 2014 guidance integrated and revised two previous FRC guidance documents:

• Internal Control: Guidance for Directors on the Combined Code, 2005 (formerly known as the Turnbull Guidance);
• Going Concern; Liquidity Risk: Guidance for Directors of UK Companies, 2009 (superseded the Guidance for Directors of Listed Companies that was issued in 1994)

It aimed to 'link the traditional ‘Turnbull’ guidance on internal control with emerging good practice for risk management, as reflected in the conclusions of both the FRC’s ‘Boards and Risk’ report and the final recommendations of the Sharman Panel of Inquiry into Going Concern and Liquidity Risk.'

Boards and Risk: A summary of discussions with companies, investors and advisers
In 2011 the FRC published the ‘Boards and Risk’ report, which reflected the views of chairmen, executive and non-executive directors and heads of risk and internal audit at major listed companies. The discussions highlighted that a review of the Turnbull Guidance was needed, in order to reflect the role of the Board outlined in the 2010 UK Corporate Governance Code.

The Sharman Inquiry
The 2012 Sharman Inquiry aimed to identify how companies and auditors could address going concern and liquidity risks. The Panel proposed some harmonisation and clarification of definitions in the accounting, auditing and governance requirements.

• Risk committees
• Sarbanes-Oxley Act
• Turnbull report