CIMA issues comment to FRC on Combined Code

23 July 2007

CIMA (the Chartered Institute of Management Accountants) has issued comment to the Financial Reporting Council (FRC) with regard to the latest review of its Combined Code.

CIMA is committed to supporting and upholding the highest standards of corporate governance and believes that the Combined Code continues to have a positive impact and that no major changes are required at this stage. Indeed, the Institute would not welcome any major overhaul to the code as change for change's sake could undermine the current corporate governance regime.

However, as a firm supporter of ethical standards, CIMA does believe that there is a need for the FRC to give a stronger view about the importance to lead by example. CIMA is of the opinion that the need for a board to set and demonstrate an appropriate and ethical tone from the top cannot be emphasised enough.

Furthermore, CIMA believes that it is necessary for the FRC to provide additional clarification on the 'comply or explain' principle as at present there appear to be a number of conflicting opinions as to the extent to which compliance should be regarded as the norm in order to satisfy 'best practice'. CIMA is of the view that, provided a company gives an acceptable explanation, there is no reason why it cannot deviate from as much of the code as it thinks fit.

Charles Tilley, Chief Executive at CIMA, explains:

"CIMA is a strong supporter of high standards of corporate governance and the FRC's Combined Code. I would urge the FRC to take our comments on board with regards to emphasising the need for ethical standards as well as the need to further clarify the 'comply or explain' principle. There is a danger that if the 'comply or explain' principle is deemed not to have worked in the way that it was originally intended, there could be a shift towards more rules-based regulation, which could lead to a greater regulatory burden on UK business."

ENDS.

For further information, please contact:
Katie Scott
Senior Press Officer, CIMA
+44 (0) 20 8849 2347
Katie.Scott@cimaglobal.com

Notes to editors

1. CIMA (the Chartered Institute of Management Accountants) is the only international accountancy body with a sole focus on business. It is a world leading professional institute that offers an internationally recognised qualification in management accountancy, focusing on accounting in business, in both the private and public sectors. It is the voice of over 158,000 students and members in 161 countries. CIMA is responsible for the education and training of management accountants who work in industry, commerce and not-for-profit and has more members in the public sector than any other UK based body. CIMA prides itself on the commercial relevance of its syllabus, which is in tune with the activities of high performance organisations, and evolves continually to reflect the latest developments in global business. According to independent research conducted by the University of Bath School of Management, CIMA's syllabus and examination structure are the most relevant to the needs of business of all the accountancy bodies assessed. See the CIMA Difference report for further information at www.cimaglobal.com/thecimadifference. CIMA is committed to upholding the highest ethical and professional standards of members and students, and to maintaining public confidence in management accountancy. For more information about CIMA, please visit www.cimaglobal.com.