Cadbury Report

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0 0 REPORT

OF

THE

COMMITTEE

ON

0 0

THE

F INANCIAL A S P E C T S
OF

C ORPORATE G OVERNANCE

1

DE

C E M B E R

1992

0 0 REPORT

OF

THE

COMMITTEE

ON

0 0

THE

F INANCIAL A S P E C T S
OF

C ORPORATE G OVERNANCE

0 1992 The Committee on the Financial Aspects of Corporate Governance and Gee and Co. Ltd.

Reproduction of this publication in whole or in part is unrestricted for internal communications within a given organisation. It is otherwise subject to permission which will not be refused but will attract a reasonable reproduction charge. A leaflet is available from the Publishers setting out full details of the level of the charge and when it is applicable.

First published December 1992

ISBN 0 85258 913 1 (Report) ISBN 0 85258 915 8 (Report with Code of Best Practice)

Gee (a division of Professional Publishing Ltd) South Quay Plaza 183 Marsh Wall London El4 9FS Freephone: (0800) 289520 Fax: (071) 537-2557

Printed in Great Britain by Burgess Science Press.

Queries and correspondence relating to the report should be addressed to: The Secretary Committee on the Financial Aspects of Corporate Governance Up to 31 Decemher~ 1992 P.O. Box 433 Moorgate Place London EC2P 2BJ Tel: (07 I) 628-7060 ext.2565 Fax: (071) 6281874

From 1 Ja/rrrar~y 1 9 9 3 c/o The London Stock Exchange L o n d o n EC2N IHP Tel: (071) 797-4575 Fax: (071) 4.1~0:6822

Additional copies of the report may be obtained from: Gee (a division of Professional Publishing Ltd) South Quay Plaza 183 Marsh Wall London El4 9FS Freephone: (0800) 289520 Fax: (071) 537-2557 Price: &IO.00 per copy, including a copy of the Code of Best Practice. The Code of Best Practice may also be purchased as a separate publication, price fIlO.00 per pack of ten.

PAGE
PREFACE

9
11

TH E

INTRO D llc1‘10 N R EASONS
FOR SETTING UP THE

COMMITTEE

C ORPORATE

GOVERNANCE

R EPORT C O N T E N T
T H E C ODE
OF

B EST P R A C T I C E
TO WHOM DIRECTED
Ai__

16
.-

C OMPANIES

C ODE P R I N C I P L E S S TATEMENT K EEPING
OF

CiL
UP TO DATE

COMPLIANCE C ODE

THE

COMPLIANCE
T H E BOARD
_

20
__

B OARD E F F E C T I V E N E S S T HE C H A I R M A N N O N- EXECUTIVE P ROFESSIONAL DIRECTORS ADVICE

DIKECTORS' TRAINING B OARD S TRUCTURES T HE C OMPANY
AND

PROCEDURES

,~~~

SECRETARY

D IRECTORS ' RE SP ONSIBILITIES S TANDARDS N OMINATION 01: CO N D U C T COMMITTEES

INTEKNAL CoNTRoLs AUDIT COMMITTEES INTEKNAL AU D I T B OARD R E M U N E R A T I O N

CONTENTS

PAGE

F INANCIAL R E P O R T S R EPORTING P R A C T I C E P ENSIONS G O V E R N A N C E 36 I MPORTANCE OF

AUDIT

P ROFESSIONAL O B J E C T I V I T Y ‘ QU A R A N T I N I N G’ AUDIT R OTATION W AYS TO INCREASE OF FROM

O T H E R SERVICES

AUDITORS
AND

E FFECTIVENESS

V ALUE

OF THE

AUDIT
_

T HE ‘ EX P E C T A T I O N S G A P’ INTERNAL C O N T R O L ~~~~__~ G OING C O N C E R N FRAUD O THER I LLEGAL A C T S A U D I T O R S ’ LI A B I L I T Y A UDIT C O N F I D E N C E TH
E

SHAREHOLDERS A CCOUNTABILITY
OF

48 B OARDS
TO

SHAREHOLDERS ‘_

INSTITUTIONAL SHAREHOLDERS SHAREHOLDER C O M M U N I C A T I O N S S H A R E H O L D E R INFLUENCE

c 0 NC I, US I 0 N
SUMMAKY OI’ ~~liCOMMENl)A1‘IONS

53

54

CONTENTS

PAGE

A.PPENDICES I
2 T HE C
O M M I T T E E’ S

61
M
EMBERSHIP AND

T ERMS

OF

R EFERENCE T HE R OLE OF B O D I E S R E F E R R E D T O I N T H E R E P O R T

3 4 5 6 I

D I R E C T O R S’ R E S P O N S I B I L I T Y S T A T E M E N T A UDIT C O M M I T T E E S C URRENT S TATUTORY AND

O THER R E Q U I R E M E N T S

A U D I T O R S ’ LI A B I L I T Y : TH E C A P A R O C A S E C ONTRIBUTORS AND

R ELEVANT P UBLISHED S T A T E M E N T S

When our Committee was formed just over eighteen months ago, neither our title nor our work programme seemed framed to catch the headlines. In the event, the Committee has become the...
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