Many of Britain's largest companies have been warned they will fail to comply with the spirit of the Turnbull corporate governance code because they are locked into control approaches developed 40 years ago. The final version of the Turnbull report is due out at the end of this month and will be incorporated into the Stock Exchange's combined code. But speaking at an English ICA seminar on internal audit last week, Pricewaterhouse-Coopers global risk assurance group director Kathryn Vagneur, said the efforts of many companies would fall short of the mark. She blamed a lack of understanding of the importance of wider risk analysis by senior management, and the limited scope of internal auditing. 'You can deliver Turnbull on the surface and still do nothing,' she said. 'It requires a root and branch re-think which is probably going to be a ten-year job for most companies.' Many control approaches used today were designed for General Motors during the 1950s, and a lack of applied research has left some internal auditors without the resources and necessary structure to be able to report on the entire remit of Turnbull, she added. Companies have already been warned of the high cost of compliance and the time it takes to improve procedures. GlaxoWellcome finance director John Coombe said that it had taken the company two years of close supervision to establish audit procedures that complied with Turnbull. One head of internal audit from an international utility company said he had been forced to spend up to £30,000 on consultancy from KPMG to convince his chief executive of the need for compliance. But one Big Five specialist warned much of the guidance on Turnbull written by accountants would offer little comfort because consultants often lacked the line management skills to understand more than the fundamental cost issues.
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