The publication of the Turnbull guidance represented a radical redefinition of the nature of internal control as a feature of corporate governance in the UK, explicitly aligning internal control with risk management. This paper explores this change, using sociological perspectives on risk and its conceptualisation to frame the debate about internal control and risk management within the UK corporate governance arena – the most recent manifestation of an ongoing competition for the control of economic and social resources. The paper demonstrates that developments in corporate governance reporting requirements offer opportunities for the appropriation of risk and its management by groups wishing to advance their own interests. This is illustrated by a review of recent changes in internal audit.

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The establishment of board sub-committees has been strongly recommended as a suitable mechanism for improving corporate governance, by delegating specific tasks from the main board to a smaller group and harnessing the contribution of non-executive directors. In the UK, the Cadbury committee proposals focused on audit committees and the Greenbury study group advocated remuneration committees. Over the last decade, most large public com-panies have set up such committees, but their impact on governance standards has not been widely explored. This paper identifies significant differences in the orientation and operation of these committees. It also draws on interview data collected from participants in audit and remuneration committees to argue that these differences may lead to unacknowledged pressures on non-executive directors who form the membership of both committees. Given the current focus on the role of non-executive directors, the impact of such pressure is of particu-lar importance. Copyright Blackwell Publishing Ltd. 2004.

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In the wake of the report of the Cadbury Committee on Financial Aspects of Corporate Governance, most major public companies in the UK now have an audit committee in place. However, commentators have noted that the establishment of an audit committee does not guarantee its effectiveness and it is pertinent to the continuing corporate governance debate to consider how such effectiveness may be assessed. This paper reports on a study which examines audit committee activities through interviews with audit committee chairs, finance directors and internal and external auditors. The study identifies influences on the development and activities of audit committees which have not previously been researched in any detail: these include the reasons for audit committee establishment, the timing and conduct of meetings, and communication between participants. The paper argues that audit committee effectiveness should be evaluated from a perspective which acknowledges these influences and recognises the continuing development of the audit committee role over time.

The Code of Best Practice produced by the Cadbury Committee on the Financial Aspects of Corporate Governance (Cadbury Committee 1992) may be viewed as an ethical code in that it prescribes standards of board behaviour. The Code’s specific recommendations with regard to audit committees appear to offer a practical mechanism for the promotion of ethical behaviour through the inhibition of potentially unethical influences exerted by executive directors over external auditors. The rationale for these recommendations centres on the independence of audit committee members, implying that independence is a prerequisite for ethical behaviour. This paper questions the assumptions regarding the role of independence through an exploration of conceptions of independence held by individuals involved in the activities of audit committees in major UK public limited companies. It suggests that audit committees may have an unarticulated role in providing an arena for the display of independence by the participants. This display forms a part of the ceremonial performance which builds confidence in corporate governance mechanisms.

Audit committees have become a standard feature of corporate governance in UK listed companies since the publication of the Cadbury Committee's report in 1992. Despite some initial sceptical comment, their widespread adoption has apparently been uncontroversial. However, a decade later, remarkably little is known about how they operate and whether they are effective in providing the benefits anticipated by Cadbury. In the aftermath of Enron, expectations of the audit committee role in supporting auditor independence are likely to intensify. A key feature of audit committee activity -indeed, of the role of the non-executive director -appears to be the asking of questions, but the practical link between the questioning process and the achievement of the benefits outlined by the proponents of audit committees remains obscure. This paper argues that both the content and context of the questioning process deserve further examination if audit committee activity is to be seen as anything more than a ceremonial performance.

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