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New guidance for senior executives on risk can help avoid additional regulatory attention 14 December 2011 Practical guidance on implementing European company law requirements on risk management, internal control and internal audit can help reduce further regulatory attention, according to the Federation of European Risk Management Associations (FERMA) and European Confederation of Institutes of Internal Auditing (ECIIA). The two organisations joined forces to produce a best practice guide for senior managers on the EU 8th Company Law Directive, which is published today. This follows Part 1 of the Implementation Guidance on the 8th Company Law Directive for boards and audit committees, released by FERMA and ECIIA in September 2011. Both parts are available free from the FERMA and ECIIA websites. (http://www.ferma.eu/wp-content/uploads/2011/12/eciia-ferma-guidance-on-the-8th-eu-company-law-directive-part-2.pdf) Previously, there was no advice published for senior managers and executive committees on practical approaches to supporting the board and audit committees in meeting their responsibilities under article 41-2b of the Directive: "Monitoring the effectiveness of internal control, internal audit and risk management systems." Carolyn Dittmeier, President of ECIIA, commented: "Today, it is crucial for organisations to think clearly about their internal assurance processes to avoid being subject to additional external regulation. The 8th EU Company Law Directive coupled with our papers gives organisations the necessary guidance to enable them to move forward with a governance framework that provides a risk-aware culture to maximise the opportunities of success."
The publication offers guidance drawn from the real-life experience of members of FERMA and ECIIA. It takes senior executives through a series of questions that show how they can support the board in managing risks, and making best use of internal control and assurance from internal audit. The purpose of FERMA and ECIIA in producing Part 2 of the Guidance is not to deliver definitive answers, but to suggest approaches that senior executives can adapt for their companies. Sample questions: Among the general questions the Guidance prompts the executive committee to ask are:
Other sets of questions specifically cover risk management, internal control and internal audit.
Notes to journalists The 8th European Company Law Directive is 2006/43/EC and specifically deals with statutory audits of annual accounts and consolidated accounts.
Press contacts FERMA ECIIA
FERMA The Federation of European Risk Management Associations (FERMA) brings together 21 national risk management associations of 19 countries. It represents a wide range of business sectors from manufacturing to financial services, charities and health organisations, as well as local government organisations. FERMA's objectives are to support its members by coordinating and enhancing awareness and effective use of risk management, insurance and risk financing in Europe. FERMA organises a bi-annual forum and a bi-annual benchmarking survey on the status of risk management in Europe presented at a seminar for all its members. ECIIA The European Confederation of Institutes of Internal Auditing (ECIIA) is the professional representative body of 35 national Institutes of Internal Audit in the wider European area. The ECIIA's objective is to support corporate governance and the internal audit profession in the European Union and in the ECIIA's member countries and to promote the application of the global Institute of Internal Auditors' Standards and Code of Ethics to all internal audit professionals in the public and the private sector. The ECIIA undertakes research on topics related to internal audit, business control, risk management and corporate governance. It publishes position papers, briefings, reports and a newsletter.
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Jorge Luzzi, President of FERMA, said: "Good governance depends on managers being conscious that good control reinforces management systems. With this Part 2 of the Guidance, ECIIA and FERMA aim to provide senior executives with practical guidance to be adapted to the culture, activities and organisation of their companies." 