Key Governance Developments - November 2019

Discover our latest key governance news!


Regulator calls for break-up of Big Four accountants in UK

The UK government should break up the Big Four accounting firms, Deloitte, EY, KPMG and PwC, argues Simon Dingemans, chairman of the country's Financial Reporting Council. He says that operational separation of accounting and consultancy at the Big Four, and even the bigger six, should be the centrepiece of a reform to drive up audit quality. Dingemans has also spoken out against the joint auditing formula imposed by the Competition and Markets Authority, saying it leads to duplication, confusion of responsibility, and increased cost without providing any clear added value.

Best source: Financial Times (subscription required)


Wirecard expands scope of accounting enquiry by KPMG

Markus Braun, CEO of German payment company Wirecard, has widened the scope of a review of the group's accounts by KPMG in order to challenge allegations by the Financial Times that its finance team in Singapore inflated sales and profit figures from operations in Ireland and Dubai. The enquiry will examine separate claims that Wirecard overstated cash advances to merchants, and that its accounting for third-party transaction acquisition was incorrect. The review should be complete before the end of March next year.

Best source: Reuters


Regulators urge Deutsche Bank’s Sewing to give up dual role

The European Central Bank and BaFin are urging Deutsche Bank's Christian Sewing to give up his dual role as CEO and head of investment banking, because the current situation poses a conflict of interest that could interfere with the bank's restructuring. They argue that the CEO must promote prudent risk-taking, while the chief investment banker is a risk creator. The roles had traditionally been kept separate until Sewing took on the investment banking position in July. However, Deutsche insists it has no intention of changing leadership of the investment bank again.

Best source: Financial Times (subscription required)

See also: Handelsblatt (in German, subscription required)


Fund industry group warns UK listed firms over executive remuneration

The Investment Association, the industry group that represents 250 UK fund management companies, has written to the heads of remuneration committees at companies in the FTSE 350 index to warn against excessive and opaque executive pay packages. The organisation says listed companies should simplify compensation structures, justify executive pay, and strengthen provisions to claw back bonuses after executives leave their jobs.

Best source: Financial Times (subscription required)

Standard Chartered cuts CEO and CFO remuneration after investor complaints

Standard Chartered has lowered the pension allowance of CEO Bill Winters from £474,000 to £237,000 next year, and reduced that of chief financial officer Andy Halford from £294,000 to £147,000, after complaints from shareholders. Nearly 40% of shareholders declined to approve the bank’s proposed executive remuneration package at its annual general meeting in May.

Best source: Financial Times (subscription required)