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The role of Chartered Accountants who act as non-executive directors

On this page members of the Corporate Governance Community can find more information on the role of chartered accountants who act as non-executive directors

About the role

The role of non-executive directors has been under increased scrutiny since the Enron scandal. This scrutiny has increased further as a result of the debate on business risks caused by the effects of the financial crisis and global economic slowdown.

The Enron scandal was investigated by the Joint Disciplinary Scheme (JDS) of the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Scotland (ICAS). While no disciplinary action resulted, the JDS suggested that there was a need to clarify the 'duties and responsibilities of chartered accountants who act as non-executive directors' (The Enron Corporation: Investigation into Lord Wakeham, a member of the Institute of Chartered Accountants In England and Wales. JDS, 2008).

ICAEW is of the view that the key requirements which are expected of non-executive directors in general and chartered accountants in particular are already in place and we draw attention to the key items below.

Key requirements

The specific responsibilities of non-executive directors have been outlined in a number of corporate governance reports, publications and guidance. In summary, non-executive directors are expected to contribute to the board's effectiveness by providing independent and objective advice in a number of areas, including strategy, performance, risk management and reporting. To be effective, non-executive directors must be competent and demonstrate high ethical standards of integrity and probity.

Non-executive directors who are chartered accountants are required by the ICAEW's Code of Ethics to adhere to the principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. High standards of professional behaviour are the hallmark of the accountancy profession and fundamental to ensuring trust in business reporting and practices.

The role of non-executive directors is wide ranging and challenging. They are expected to focus on board matters and not on the day-to-day running of the business, thus providing the board with independent and objective advice on business issues. They are also expected to have appropriate levels of knowledge and experience, which may include specialist knowledge. As well as demonstrating high standards of conduct and competence, gaining the trust of other board members requires non-executive directors to have certain personal qualities such as the ability to challenge effectively and constructively.

ICAEW Technical resources

The ICAEW produces ground-breaking technical information to assist members, students and professionals. Each topic area includes the latest news, guidance, publications and research papers. It monitors its guidance for boards and non-executive directors and will issue further guidance as appropriate.

In addition, the ICAEW provides advice and guidance to its members and students on a range of topics including ethics, law and reporting. Find out more about the benefits of membership

Reports, publications and guidance

Summarised below are reports, publications and guidance that are of particular relevance to the role of non-executive directors:

Corporate governance