A FTSE100 Company Secretary writes...
How are other companies setting materiality for the purpose of identifying material controls (under provision 29 of the 2024 UK Corporate Governance Code). Are people typically using auditor’s recommendations of 5% of PBT – and is there a different rationale for financial vs non-financial risks / controls?
Sorry for the delay, but just to say that the post of 10 March is very useful and I entirely agree with the FRC’s views expressed in that post. IMHO this simple approach really gives us sufficient guidance to enable a competent board to determine materiality.
There’s also a wealth of guidance out there from advisers, which is helpful, but is also part of their work-generating industry.
An example of useful free advice is from Deloitte’s “Future of Controls” website.
(Other sources of advice are available)
Hello. Having attending the briefing with Maureen Beresford from the FRC on 28th Feb, she advised that it should be only those controls that, if failed, would be critical to the success of the company, whether financial/ non- financial.
She said that they should be unique to each company and that she didn’t expect that there would be more than 10 in total. The FRC’s goal is to get the Board involved in determining the material controls and then maintaining oversight of their effectiveness. I hope that’s helpful.