Southampton: Smith & Williamson warns on Act

Smith & Williamson is urging businesses on the south coast to proactively manage risk to avoid falling foul of new legislation which came into force on 31 December last year.

Companies completing annual accounts should ensure that they are including a sufficient demonstration of the processes they have in place to manage risk or they will fail to comply with legislation set out in the Companies Act.

Chris Appleton, director in charge of the Southampton office of Smith & Williamson, said: “The Companies Act requires most businesses to publish a business review alongside their statutory accounts, which should also include a formal risk assessment. Essentially, the directors of a company are not only expected to consider ‘the risk of loss resulting from inadequate or failed internal processes, people and systems’, but also to demonstrate that they have processes in place to monitor and mitigate that risk.”

The review must include:

• a report on the development and financial performance of the business in the last year

• details of the principal risks and uncertainties faced by the company

• an analysis of the company’s financial and non-financial key performance indicators.

Appleton continued: “Recent high-profile corporate failures have led to a greater emphasis on corporate governance. This legislation is intended to encourage companies to consider business risk in a more structured and controlled way so that risk management is integrated with normal business practices. As well as recognising the need to comply with this legislation, I would urge companies to also view this as an opportunity to improve business planning and performance.”

For further information, contact: Chris Appleton, director in charge of the Southampton office of Smith & Williamson

Tel: 023-8082-7600.