European Corporate Governance Forum

Statement on Risk Management and Internal Control

During 2005 and since, the Forum has taken account of current developments in requirements for risk management and internal control. Many of these are of comparatively recent origin and experience of their costs and benefits continues to evolve. The Forum considers that recent initiatives in the EU will serve to enhance disclosure and transparency and will also require company boards to keep under regular review issues of risk management and internal control. ...

... the Directive requires the audit committee (or alternative body) of listed and other eligible public interest entities to monitor the effectiveness of the company’s internal control, internal audit where applicable, and risk management systems.

The new amending Directive concerning annual and consolidated accounts requires listed companies to publish an annual corporate governance statement, including a description of the main features of any existing risk management systems and internal controls in relation to the financial reporting process. ...

... the Forum considers that there should be an adequate balance between the benefits of any additional requirements and the costs and other burdens for companies. Therefore, the Forum while confirming that companies' boards are responsible for monitoring the effectiveness of internal control systems considers that there is no need to introduce a legal obligation for boards to certify the effectiveness of internal controls at EU level. ...

[excerpt from the statement]

More information and download on the ECGF web site. link