International Financial Accounting and Theory Essay

International Financial Accounting and Theory - Essay Example The development of corporate governance in the UK since 1991 up to 2011 is assessed in this paper with a discussion on the various reports which are involved in the changes in the governance of companies in the UK. There were many corporate governance failures within UK companies such as Maxwell communications in the mid and late 1980s which included risky acquisitions, large debts and missing company assets. This led to the setting up of a committee in May 1991 which was chaired by Sir Adrian Cadbury to investigate the failures in corporate governance of companies with an aim of making recommendations for necessary changes to the control of companies. Shelmerdine and Walter (2001, p. 142) assert that the aim of the committee was to perform a thorough investigation of the corporate governance system in British Companies so that relevant suggestions would be provided in their report to ensure that the confidence of investors on the British Companies was regained. The Cadbury report wh ich was released in December 1992 recommended that the companies which were listed in the report had to provide their annual accounting reports which had to be reviewed by auditors for verification and compliance. The Cadbury report also recommended for a remuneration committee for each company to cater for the rights of the shareholders of British companies as said by Pendleton (2005, p. 107). The Greenbury Committee which was formed after the Cadbury Committee produced its report on corporate governance in 1995. The Greenbury committee was created in response to the need for a review of the remuneration of company directors. The Greenbury report which followed the guidelines of the Cadbury report made recommendations for the improvements on the control of the remuneration of company executives. Therefore the report recommended that the remuneration committees of companies should comprise at least three non-executive committee members to make decisions on executive remuneration pac kage. According to Sheridan, Jones and Marston (2006, p. 419), the Hampel committee which was created to recommend changes in the corporate governance of British companies released its report in 1998. The report recommended corporate governance which protected the interests of investors. The Hampel report acted to endorse the recommendations of earlier reports on corporate governance so that improvements were made. More developments in the corporate governance of the UK companies were demonstrated by the 1999 Turnbull Report which provided company directors guidance for internal control of companies which followed a combined code of early reports. The report defined the obligation of directors in relation to providing proper internal controls that ensured quality in auditing and reporting the annual financial reports as demonstrated by Pendleton (2005, p. 113). The Higgs Report of 2003 was based on the review of the effectiveness of non-directors in execution of their roles within c ompanies. The Higgs report was in support of the existing guidelines of corporate governance and created a guidance that was based on the review of previous scandals in British companies. The guidance of the Higgs Report was amended in December 2009 by the Institute of Chartered Secretaries and Administrators (ICSA). The Draft guidance of the ICSA was