According to Reuters, Britain’s accounting watchdog says forcing executives at top listed companies to personally vouch for the accuracy of financial statements would drive better company behavior and help stamp out fraud1 . In the United States, public company executives are required to certify the accuracy of the company’s financial statements and the company’s effectiveness of internal controls and are subject to criminal penalties for certifying a misleading or fraudulent financial report. There have been multiple discussions around introducing a similar set of rules in Britain regarding internal controls.
According to COSO 2013 (a widely accepted internal control framework), “A system of internal control allows management to stay focused on the organisation’s pursuit of its operations and financial performance goals, while operating within the confines of relevant laws and minimizing surprises along the way. Internal control enables an organisation to deal more effectively with changing economic and competitive environments, leadership, priorities, and evolving business models.” A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. The key word in this definition is “process.” Most organizations should consider carefully the costs and benefits of the efforts required. Leveraging lessons learned during U.S. implementations of such efforts can help in considerations around scoping, documentation, testing and other internal processes. Below are some common areas to consider related to internal controls over financial reporting and the “process” by which a company should begin optimising and/or implementing its internal controls to get a head start on Britain’s approaching regulation.
 Jones, Huw. “UK watchdog backs tougher Sarbanes Oxley-style rules for top companies.” Reuters, March 9, 2020.