Exploring the UK’s Response to Governance Failures

ZR Consultants (ZRC) have been anticipating the implementation of “UK SOX” for the last few years.  We have posted about its clear benefits and the outcomes.

It was disappointing to see the announcement last month by the UK government that nearly all of the proposed changes to the governance code are being scrapped. The government has ignored all the warnings which galvanised them into action in the first place  i.e. the significant collapse of Carillion and the aftermath.

To quote the Guardian newspaper article “From 2026 – so after yet more delay – the boards of quoted companies with a premium listing on the London Stock Exchange will have to declare that their firms’ internal controls are up to scratch. If this rule change sounds like a watery imitation of what was promised in the aftermath of the Carillion fiasco, you’d be right.”

The government’s latest stance whilst acknowledging responsibility around controls at Board level, still provides opportunities to shift responsibility. SOX (or a lighter version of it) implemented correctly and then transferred to a “Business as Usual” programme, would’ve ensured that Internal Controls are continually managed to high standards with evidence to support those claims. This would’ve left no room for individual subjectivity preventing further collapses like Carillion in the market and improved investor confidence.

ZRC have specialised expertise in Governance, Risk and Controls with a track record of delivering exceptional results. We continue to support our clients, whether it’s achieving SOX Compliance or transforming Business and IT Controls, conducting Internal Audits or addressing regulatory compliance.

For more information, or to find out how ZRC can help you, please contact us or connect with William Bennett or Zeshan Raja on LinkedIn.

“Tweaks, delays and compromises define UK’s post-Carillion response”, The Guardian https://www.theguardian.com/business/2024/jan/22/tweaks-delays-compromises-define-uk-post-carillion-response

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