ACCA's corporate governance and risk management principles - P1

10 principles have been discussed and ACCA believes they are fundamental to all systems of corporate governance that aspire to being the benchmark of good practice.

1. Boards, shareholders and stakeholders share a common understanding of the purpose and scope of corporate governance - good corporate governance is about boards directing and controlling the organisations in the interests of long-term owners. It is also about boards being accountable to company's owners and accounting properly for their stewardship to ensure sound internal control.

2. Boards lead by example - boards should set the right tone and behave accordingly, paying particular attention to ensuring the continuing ethical health for their organisations.

3. Boards appropriately empower executive management and committees.

4. Boards ensure their strategy actively considers both risk and reward over time.

5. Boards are balanced - boards should include both outside non-executive and executive members in the governance of the company. No single individual should be able to dominate decision making.

6. Executive remuneration promotes organisational performance and is transparent.

7. Organisation's risk management and control is objectively challenged, independently of line management - internal and external audit are potentially important sources of objective assessment and assurance.

8. Boards account to shareholders and, where appropriate, other stakeholders for their stewardship - a universal requirement is to disclose sufficient, appropriate, clear, balanced, reliable and timely financial, and other, information to those to whom boards should be accountable.

9. Shareholders and other significant stakeholders hold boards to account - probably through fully independent external audit process overseen by an effective audit committee.

10. Corporate governance evolves and improves over time.