Written Report on Gg and Csr

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TOPIC VI

STANDARD SETTING, BEST PRACTICES,

AND CORPORATE GOVERNANCE REFORM

6.3 HIGGS REPORT, CADBURY REPORT, AND OTHER

REPORTS

SUBMITTED BY:

JAMAICA ROSE SALAZAR

SUBMITTED TO:

PROF.CAROLINA GUERERRO

APRIL 10, 201

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The Cadbury Report……………………………………………….……..Page 2

The Rutteman Report…………………………………………………….Page 2

The Greenbury Report……………………………………………………Page 3

The Hampel Report……………………………………………………….Page 3

The Turnbull Report……………………………………………………….Page 3

The Myners Report………………………………………………………..Page 3

The Higgs Report………………………………………………………….Page 4

The Smith Report………………………………………………………….Page 4

Reeren!es…………………………………………………………………Page "

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The Cadbury Report #$%%2& 'as entitled Financial Aspects of Corporate

Governance 'hi!h 'as issued by The Committee on the (inan!ial )spe!ts o Corporate

Go*ernan!e !haired by )drian Cadbury. +t had a remit to re*ie' those aspe!ts o

!orporate go*ernan!e relating to inan!ial reporting and a!!ountability. The report sets

out re!ommendations on the arrangement o !ompany boards and a!!ounting systems

to mitigate !orporate go*ernan!e ris,s and ailures. +ts re*ised and inal *ersion 'as

issued in -e!ember o the same year. The reports re!ommendations ha*e been used

to *arying degrees to establish other !odes su!h as those o the /uropean 0nion1 the

0nited States1 the orld an,1 et!.

The report begins by re*ie'ing the stru!ture and responsibilities o boards o

dire!tors. e5t1 they !onsider the role o auditors and address a number o

re!ommendations to the a!!ountan!y proession. They then deal 'ith the rights and

responsibilities o shareholders.

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• +t is the board6s duty to present a balan!ed and understandable assessment o

the !ompany6s position.

• The board should ensure that an ob7e!ti*e and proessional relationship is

maintained 'ith the auditors.

• The board should establish an audit !ommittee o at least three non8e5e!uti*e

dire!tors 'ith 'ritten terms o reeren!e 'hi!h deal !learly 'ith its authority and

duties.

• The dire!tors should e5plain their responsibility or preparing the a!!ounts ne5t to

a statement by the auditors about their reporting responsibilities.• The dire!tors should report on the ee!ti*eness o the !ompany6s system o

internal !ontrol.

• The dire!tors should report that the business is a going !on!ern1 'ith supporting

assumptions or 9ualii!ations as ne!essary.

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The +nternal Control or,ing Group 'as established to ulill the re9uirements o

the Cadbury Committee or the proession to de*elop guidan!e on internal !ontrol. +t

'as !haired by Paul Rutteman and !omprised indi*iduals put or'ard by The HundredGroup o (inan!e -ire!tors1 +C)/ and +C)S. The inal report rom the group1 +nternal

!ontrol and inan!ial reporting8 guidan!e or dire!tors o listed !ompanies registered in

the 0:1 'as published in -e!ember $%%4 and is usually reerred to as the Rutteman

Report.

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+n ;anuary $%%" the Conederation o ritish +ndustry #C+& established the Study

Group on -ire!tors Remuneration under the !hairmanship o Sir Ri!hard Greenbury

'ith a remit to identiy good pra!ti!e in determining dire!tors remuneration and to

prepare a !ode o pra!ti!e or 0: P. +t 'as designed to be a re*ision o

the !orporate go*ernan!e system in the 0:. The remit o the !ommittee 'as to re*ie'

the Code laid do'n by the Cadbury Report. +t as,ed 'hether the !odes original purpose

'as being a!hie*ed. Hampel ound that there 'as no need or a re*olution in the 0:

!orporate go*ernan!e system. The Report aimed to !ombine1 harmonise and !lariy the

Cadbury and Greenbury re!ommendations. The Hampel Report relied more on broad

prin!iples and a !ommon sense approa!h 'hi!h 'as ne!essary to apply to dierent

situations rather than Cadbury and Greenburys bo58ti!,ing approa!h.

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+t 'as entitled Internal Control: Guidance for Directors on the Combined

Code #$%%%&. Turnbull report 'as dra'n up 'ith the


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Review of the role and effectiveness of non-eecutive directors #or the ?Higgs

re*ie'?& 'as a report !haired by -ere, Higgs on !orporate go*erna!e !ommissioned by

the 0: go*ernment1 published on ;anuary 2@1 2@@3. +t re*ie'ed the role and

ee!ti*eness o non8e5e!uti*e dire!tors and o the audit !ommittee1 aiming at impro*ing

and strengthening the e5isting Combined Code.

There 'as 'idespread unrest ater the s!andals in the 0S1 in*ol*ing /nron1

orldCom and Ty!o. The 0S opted or legislation under the Sarbanes8A5ley )!t. Higgs

strongly ba!,ed the e5isting non8pres!ripti*e approa!h to !orporate go*ernan!eB

?!omply or e5plain?. et he ad*o!ated more pro*isions 'ith more stringent !riteria or

the board !omposition and e*aluation o independent dire!tors. He 'anted to remo*e

some o the dis!retion that the Code allo'ed.

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S(-!($: on8e5e!uti*e dire!tors should !onstru!ti*ely !hallenge and !ontribute to thede*elopment o strategy.

P$-&%-!'5$: on8e5e!uti*e dire!tors should s!rutinise the perorman!e o

management in meeting agreed goals and ob7e!ti*es and monitor the reporting o

perorman!e.

R)7: on8e5e!uti*e dire!tors should satisy themsel*es that inan!ial inormation is

a!!urate and that inan!ial !ontrols and systems o ris, management are robust and

deensible.

P$%/#$: on8e5e!uti*e dire!tors are responsible or determining appropriate le*els o remuneration o e5e!uti*e dire!tors and ha*e a prime role in appointing1 and 'here

ne!essary remo*ing1 senior management and in su!!ession planning.

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The Smith Report #2@@3& 'as !on!erned 'ith the independen!e o auditors in the

'a,e o the !ollapse o )rthur )ndersen and the /nron s!andal in the 0S in 2@@2. +ts

re!ommendations no' orm part o the Combined Code on !orporate go*ernan!e1

appli!able through the


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