Guidance for assurance reporting on investor compliance with Stewardship Code

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Draft guidance for reporting accountants that enables them to provide an opinion on engagement and voting processes of institutional investors has been published by ICAEW.

The draft guidance follows the publication in July 2010 of the UK Stewardship Code by the Financial Reporting Council. The Code is designed to enhance the quality of engagement between institutional investors and the companies they invest in. It will help to improve long-term returns to shareholders and the efficient exercise of governance responsibilities.

The application of the Code is on the basis of 'comply or explain'. Institutional investors such as asset managers are expected to report periodically if and how they have complied with the code, in particular with relation to their stewardship and voting activities.

ICAEW's draft guidance will help those who act as principals or represent the interests of the end-investor obtain independent assurance on their engagement and voting processes. It focuses on those aspects of the Code that are considered 'objectively verifiable' including voting policies and activities, providing a framework for reporting accountants to prepare a report and assurance opinion.

Commenting on the publication of the draft guidance. Martyn Jones, the chairman of the Stakeholder Panel, said:

'As we enter the corporate reporting season, this will be the first opportunity for institutional investors to provide assurance to end-investors on how they comply with the UK Stewardship Code. Giving that assurance is important, not just in the context of adoption of the Code itself but more importantly, in helping to rebuild confidence and trust.'

Public Sector Group News - October 2010

Please note

Views expressed in this article are those of the author and may not represent ICAEW policy. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this article can be accepted by the authors or publisher.

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