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Preface


The  role  of  the  finance  director  varies  significantly  between  companies,  depend-
ing  to  a  large  extent  on  the  complexity  and  size  of  the  business  and  the  number
of executives and managers available  to share  in  the  responsibilities. Whilst some
finance directors will concentrate primarily on financial reporting, treasury and tax-
ation issues, others will have a much wider remit and be expected to provide exper-
tise and assistance in a variety of areas.
The  field  of  financial  reporting  is  becoming  increasingly  complex,  particu-
larly  for  listed companies, where  the emphasis  is now  firmly on  transparency and
accountability.  Accounting  standards  have  become  more  conceptual  in  nature,
underpinned by a requirement for preparers of accounts to apply the spirit and rea-
soning behind  the detailed  requirements. For  listed companies,  the  requirement  to
prepare  group  accounts  in  accordance  with  International  Accounting  Standards
(IASs) has created new challenges, and the Accounting Standards Board’s plans to
converge UK accounting practice with  international requirements over  the coming
years, together with the adoption in the UK of International Standards on Auditing
(ISAs), means that all companies are likely to feel the increasing impact of interna-
tional harmonisation.
Listed companies also have significant additional reporting responsibilities under
the Combined Code and, if they are registered with the US Securities and Exchange
Commission (SEC), under the Sarbanes-Oxley Act 2002 and related SEC rules. The
current reporting requirements in respect of internal control have focused attention
on  the  issue  of  risk management  and, whilst  the  detailed  reporting  requirements
apply only  to  listed companies,  there  is nevertheless much  in  the  related guidance
that will be relevant to businesses of all sizes.
The  gradual  implementation  of  the  Companies  Act  2006  between  1  January
2007  and  1 October  2009  also  brings  further  changes,  and  in  the  difficult  transi-
tional  phase  particular  care  is  needed  in  identifying whether  the  old  or  the  new
requirements  apply.  The  accounting  and  audit  provisions  of  the  Companies  Act
2006  generally  apply  for  accounting  periods  beginning  on  or  after  6 April  2008,
although some of the new requirements in respect of auditors apply to appointments
and changes in appointments made on or after 6 April 2008. The general economic
downturn  in  late 2008 and 2009 has created  further problems, with  liquidity  risk,
the  availability  of  finance  and  going  concern  issues  receiving  particular  atten-
tion. Up to date guidance on these and related issues from the Financial Reporting
Council and Auditing Practices Board is highlighted in the relevant chapters.
These are all areas in which the finance director’s input to discussions and deci-
sions  is  likely  to be  significant.  I  therefore make no  apology  for  the  fact  that  the
chapters on audit, corporate governance,  financial  reporting and  investor  relations
are  the most substantial sections of  this book. However,  in addition  to guidance  in
these key areas, this handbook is intended to provide an overview of other business
issues and activities that may fall within the remit of the finance director. The book
is intended as an initial source of advice and guidance rather than as a comprehen-
sive manual, and sources of further information are indicated where appropriate.
This  edition  is based on  legal  and other  requirements  in  force  as  at 31  January
2009.  In  the  fast moving  world  of  today,  very  little  stands  still  for  long  and  an
  indication of known or expected future developments is therefore given where appro-
priate. No reference work can be comprehensive in this complex and fast changing
environment, or  take account of  the specific circumstances of each particular case,
and finance directors should therefore always seek appropriate professional advice.
I am particularly grateful  to Sonia McKay and Andrea Oates who have contrib-
uted the chapters on ‘Employment law’ and ‘Health and safety’ respectively, and to
the editorial team at Elsevier for their help and support.
Glynis D. Morris
Chartered Accountant