Professional Documents
Culture Documents
The Cadbury Report On Corporate Governance
The Cadbury Report On Corporate Governance
The Cadbury Report On Corporate Governance
Introduction:
The Cadbury Report, titled Financial Aspects of Corporate Governance, is a report of a board committee chaired by Adrian Cadbury that gives out recommendations on the arrangement of company boards and accounting systems to relieve corporate governance risks and failures. The report was published in December, 1992. The establishment of the committee was made in May, 1991 by the Financial Reporting Council, the London Stock Exchange. The report's recommendations have been adopted in varying degree by the European Union, the United States, the World Bank, and others.
legislation mandating certain boardroom practices. This was not the strategy the Committee ultimately suggested, but even then the publication of their draft report in May 1992 met with a degree of criticism and hostility by institution which believed their selves to be under attack. Peter Morgan, Director General of the Institute of Directors, described their proposals as 'divisive', particularly language favouring a two-tier board structure, of executive directors on the one hand and of non-executives on the other.
It is the Boards duty to present a balanced and understandable assessment of the companys position. The Board should establish an Audit Committee of at least three Non-Executive Directors with written terms of reference, which deal clearly with its authority and duties. The Directors should explain their responsibility for preparing the accounts next to a statement by the Auditors about their reporting responsibilities. The Directors should report on the effectiveness of the companys system of internal control. The Directors should report that the business is a going concern, with supporting assumptions or qualifications as necessary.