On 4 November 2019, the BEIS Committee published a letter of recommendations to the Secretary of State. Among other things, the letter covered corporate governance, audit reform and executive pay and bonuses following its public evidence sessions which examined the collapse of Thomas Cook.
The Committee's recommendations included that:
- Pension contributions are changed to create a fairer system. The Committee expects the Financial Reporting Council's replacement to have a role in this reform, alongside pressure from stakeholders, investors and remuneration committees.
- There should be greater transparency in executive bonus scheme arrangements. Pre-defined measures which are not ambiguous nor open to interpretation should be used.
- An enforceable clawback provision for a suitable period should be included in all future performance bonus arrangements, covering all elements of the bonus.
- The new Government should prioritise implementing legislation to ensure all FTSE 100 companies publish their workforce data, broken down by ethnicity and by pay band. This recommendation reiterates the recommendation in its predecessor's April 2017 report on corporate governance.
- A review of accounting practices relating to the use of goodwill and its impairment should take place. The Committee calls for graduated findings to be implemented swiftly to ensure that serious doubts over issues such as goodwill are reflected in audit opinions. This reiterates its recommendations from its April 2019 report and Sir John Kingman's review of the FRC.
- Audit firms should clearly separate the audit and non-audit parts of their business. The Committee recommends urgent reform of the sector and expresses disappointment in the Government's failure to implement reforms aimed at tackling conflicts of interest and improving audit quality.
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