The Institute of Internal Auditors (IIA) has criticised the Combined Code for "not going far enough" in certain areas of corporate governance.
In a recently published proposal called "A new agenda", the IIA puts forward two revisions for the Code. They are:
Mandatory disclosures - the IIA believes "too many companies are taking the 'comply or explain' opt out", effectively ignoring parts of the Code. There is a need to move from comply or explain to actual enforcement of a uniform set of corporate governance principles for public companies that is overseen by regulators, says the IIA.
Secondly, effective internal controls - according to the IIA the Code does not "go far enough with regard to internal control". It should be necessary for a company to confirm that its system of internal controls works well and that it encompasses the key risks facing the organisation.
The proposal also suggests that internal audits become compulsory for listed companies; that an external audit role is established with a rotation of partners taking on the job; and non-executive directors come from "diverse" backgrounds and are truly independent.
