Company directors increasingly have a corporate responsibility to identify risk and to ensure that adequate risk mitigation measures are in place.
The Turnbull Report* requires company directors of Stock Exchange listed companies to demonstrate a sound system of internal control to safeguard shareholders’ investments and company assets. The Report recommends a regular programme to assess and evaluate all risks to the business – both internal and external.
Historically internal audit procedures have concentrated almost exclusively upon confirmation of financial veracity, a position which is then verified by external auditors. The Turnbull Report, however, defines business risk in a much wider sense and requires that a company should consider and monitor its overall exposure to risk.
PINKERTON CONSULTING & INVESTIGATIONS is part of the oldest, and nowadays the largest, security company in the world. Pinkerton’s pedigree in assisting clients to control security risks for over 150 years is second to none.
We can work with you, confidentially, to ensure that your company conforms to the Turnbull Report’s requirements. Our team includes business risk specialists who can identify the threats to your personnel, products, intellectual property, assets and reputation and make recommendations to minimise those threats.
Are your company’s procedures for the assessment and management of risk adequate?
Does your company have a full understanding of risk across the organisation which is clearly assessed, communicated and understood?
Does your company have an organisational structure conducive to the effective management and mitigation of risk?
Is there management buy-in to risk identification and control at all levels of your company?
Is your company’s risk assessment system transparent with appropriate disclosure enabling stockholders to appraise risk?
Is risk assessment considered a separate exercise or is it embedded in the operations of your company?
The Turnbull Report’s main requirements are:
The board should maintain a sound system of internal control.
A director should, at least annually, conduct a review of the effectiveness of the group’s system of internal control. The annual review should cover all controls, including financial, operational and compliance controls and risk management.
The directors should report to shareholders that such a review has been conducted – usually in the Annual Report and Accounts. The Annual Report is also to include a narrative statement of how the company has applied the principles of the Combined Code and a statement as to whether these principles have been complied with throughout the accounting period in question.
Pinkerton’s expertise is increasingly in demand to help ensure that companies can comply with the Turnbull Report’s requirements.
* The ‘Turnbull Report’ refers to the document entitled “Internal Control: Guidance for Directors on the Combined Code” which was published by the Institute of Chartered Accountants in England and Wales in September 1999.
This document was prepared by the “Working Party on Internal Control” chaired by Nigel Turnbull, Executive Director of Rank Group plc. It explains the implications for company directors of the work undertaken by the “Committee on Corporate Governance” which published “The Combined Code” in June 1998.
“The Combined Code” itself built upon the work already published on the subject by the Cadbury Committee in 1992, the Greenbury Committee in 1995 and the Hampel Committee in 1998.