Financial Accounting - Essay Example

In 2003, the Financial Reporting Council adopted a combined code of two reports, one of which covered the non-executive director’s role and how they should dispense their duties in an ethical way, while the other gave guidelines on the conduct of audit committees. With time, various amendments have been made on the 2003 Combined Report, and in 2010, the Financial Reporting Council adopted the UK Code on Corporate Governance that provides the guidelines on how the listed companies in the London Stock Exchange should conduct themselves when representing their shareholders.

This paper aims at discussing the concepts contained in the code of conduct adopted on 29th June 2010, while giving a special focus on the duties and responsibilities of Non-executive directors, referring to the 2003 and the 2010 versions of The Code of Conduct. Non-executive directors of a company do not take part in the executive work of the team and are not part of the employees of the company (Walter & Shilling 2009, p. 25-28). The Governance Code obliges the directors to adhere to the financial reporting standards while representing their companies, and show accountability and prudence while doing this (Hamill et al. 2010, p. 56-59).

The mode of reporting as outlined in the code of conduct requires the company to state how it effectively applies the supporting principles and the provisions, stating whether they comply with the provisions in the code of conduct or not (Ryan, 2004, p. 16). The code separates the duties of the chairperson with those of the chief executive officer, and gives the appropriate ratio of the non-executive directors and who should be incorporated in the board committees. Companies must be headed by a Board of Directors, who oversees the overall operations of the company, holding them liable for any misrepresentation of the investors, and the losses that may thus occur in such an event.

According to Halbert and Ingulli (2011, p. 30), the directors of a