Whilst the Association of Corporate Treasurers (ACT) generally welcome the Secretary of State's statement today and the reports to which she refers (Higgs and Smith), we continue to believe that a key responsibility of the board of a company is oversight of risk.
All projects, plans, policies and strategies considered by the company should be examined not only for their own inherent risk but for what impact they have on the overall risk of the company. It is fundamental that this is a matter for the whole board - and cannot be delegated to any committee. We agree with today's reports' endorsement of the Smith committee's recommendation that especial attention to this should be given by the audit committee where there is no other board committee established to consider it. It is very important, however, that language used in this context does not imply that risk is limited to risk to the audit or a particular set of figures but that it is opened to include overall risk in the company which is by its nature forward looking. It is too easy to use restricting language, having in mind only audit and accounting.
For further information or to commission an article from the ACT on its response to the Statement by the Secretary of State for Trade and Industry "Strengthening Corporate Governance", please visit the ACT Press Room.