ICAS outlines Combined Code concerns

News Article - 13 July 2007
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The Institute of Chartered Accountants in Scotland (ICAS) is calling for the Combined Code on corporate governance not to become "an exercise in mindless compliance".

Responding to research by the Financial Reporting Council into the effectiveness of the code, ICAS has said that while the code has been useful, it must not be applied for the sole purpose of raising the number of firms which adhere to its principles.

The institute stated that too often the 'comply or explain' principle was being applied, with comply meaning good and explain meaning bad.

It recommends that the code be changed to state that it would be beneficial for companies to explain their policies.

David Wood, executive director of technical policy, said: "Overall, we believe that the Combined Code has had a positive effect in encouraging good governance.

"It's important to remember though, that as a voluntary code, there is scope to use judgement in whether certain provisions are appropriate for an individual company," he added.

The code aims to lay out guidelines on standards of good practice in relation to various issues including accountability, audit and board composition.

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