In Conversation: Exploring Culture - UK Corporate Governance Code 2024

Published: 4 August 2025

6 minute read

In this first instalment of the FRC's podcast series on the UK Corporate Governance Code 2024, Kate O'Neill, Director of Stakeholder Engagement and Corporate Affairs, sits down to explore how the revised Code encourages Boards to support consistent cultures in their companies with Lauren Tynen, Senior Corporate Governance Policy Associate, and Anneke Thordsen, Audit Market Supervision Project Director.

Transcript

0:10
Hello there, and welcome to another FRC ‘In Conversation’ podcast.

0:15
My name is Kate O'Neill.

0:16
I'm the Director of Stakeholder Engagement and Corporate Affairs here at the FRC.

0:21
And this podcast is the first in a series that the FRC is doing over the summer on a number of very important topics relating to the Corporate Governance Code, which as many of you know, was recently revised.

0:33
And today, I'm joined by two experts in the FRC teams, Lauren Tynen, who's a senior policy associate in the Corporate Governance team and Anneke Thordsen, who's a project director in the audit market supervision team.

0:48
And all will be revealed as to why corporate governance is so important to the audit market.

0:55
So welcome, Lauren and Anneke.

0:57
Hi, Kate.

0:58
Hi, Kate.

0:58
Thank you.

0:59
Well, great to have you here, but let's start at the very beginning.

1:02
What is culture?

1:04
Because it's a big word and it means a lot of different things to different people.

1:08
And why is it important?

1:09
Anneke, do you want to kick us off on that one?

1:12
Yes, thank you very much Kate, that you are 100% right.

1:15
That is such an important question and in short, it's the way things are done.

1:19
So if we had to define or put together a formula for the culture in any organisation, I would say it would be that sum total of the collective behaviours of everyone in that organisation.

1:32
So it's more than the words on paper.

1:33
The culture is how everyone in the organisation live and breathe those words, how they walk the talk.

1:40
And I guess Anneke and Lauren do come in.

1:43
It is about the whole organisation.

1:44
But you need some tone from the top, right, Lauren?

1:47
Absolutely.

1:48
Yeah.

1:48
Adopting in supporting a culture throughout an organisation really helps everyone from the board all the way to new employees to understand where they fit in the organisation and what behaviours and values are expected of them.

2:02
I guess though, then it's not just about culture.

2:05
You mentioned values.

2:06
How important is that the culture's values, purpose and a really big word strategy are aligned.

2:13
What does the Corporate Governance Code say about this?

2:15
Because in our annual review of corporate governance reporting, Lauren, these are all intertwined things that you and the team look at.

2:24
Lutely.

2:24
Yeah.

2:24
So Principle B asked that the board should establish the company's purpose, value, strategy, and satisfy itself that these and its culture are all aligned.

2:33
And we made this very subtle change to the 2024 code just to add that word, all just to really highlight the importance of considering all of these aspects.

2:42
I mean, it all comes back to purpose.

2:44
Really.

2:44
A company's purpose is the reason why it exists.

2:47
And a board that's clear about its purpose and the corporate culture needed to deliver that purpose often finds it easier to engage with shareholders and stakeholders, which in turn, of course, has lots of benefits for a company.

3:01
The stakeholders of a company are perhaps wider than when corporate governance codes were first thought of.

3:07
You know, it extends to employees, suppliers, providers of capital isn't just always the shareholders, is it?

3:13
Absolutely.

3:14
Anneke, talking about audit firms.

3:17
I mean, Lauren has talked about the corporate governance code, which is, as everyone knows, applies to listed companies in the UK.

3:23
How did the requirements that Lauren’s just taken us through extend to audit firms in the UK?

3:29
Yes, that's very interesting question, Kate.

3:31
And the larger UK firms are subscribing to and adopting the FRC's audit Firm Governance Code, which holds audit firms responsible for its purpose and values.

3:43
And then also for establishing and promoting an appropriate culture that really supports consistent performance of quality audit in the firm's role in serving the public interest.

3:52
I guess, Anneke, I mean, a lot of people don't always remember or even perhaps know that audit firms have a particular requirement of them in that they must act in the public interest because of the importance of good quality audit to well run companies.

4:07
And so do you think that the overlap that you're seeing between the two codes really reflects how interlinked quality audit and the delivery of quality audit is so important to corporates in the UK thriving and also scaling up?

4:21
Yes, absolutely, Kate.

4:23
There's a real interdependency, I think between companies and their auditors.

4:27
So the public interest really is this through that robust application of professional judgement from the auditors.

4:34
And so audit firms really should therefore promote that culture that supports auditors to challenge management effectively and support that thing that way.

4:42
And so for some firms, whether they're audit firms and some companies, Lauren, who are at different parts of their maturity and cycle, what advice would you give to companies and audit firms when they're looking to report meaningfully in this area?

4:56
Because you talked about alignment, but I guess both of you would.

4:59
We don't want empty words, we want actions.

5:02
We want examples, right, Lauren, do you want to kick us off?

5:06
Absolutely Kate, yeah.

5:06
And I think this is a really important message that hopefully we got through with the 2024 code.

5:11
We really want examples of reporting.

5:14
We want what decisions did the board make during the year?

5:16
What were the impact of these decisions or even reporting on milestones.

5:20
So what might the board do next year?

5:22
Why do they want to do this?

5:24
And we really want this focus on outcomes based reporting rather than just a list of policies and procedures that the company or audit firm might have.

5:33
Another thing that companies could consider is having a culture framework that will give them greater clarity and alignment between these purpose, values, strategy and culture.

5:43
And having a culture framework really helps teams in the organisation to join the dots and to understand how all parts of the organisation can work together to ensure that there is that 1 shared view across the organisation.

5:57
Because culture means so many different things to so many different companies, leadership, employees.

6:02
So having that framework as you've described it surely is a great place for companies to start.

6:07
Anneke, do you see the same, perhaps not exactly the same framework, but the same approach, helping audit firms think about their culture and how that underpins audit quality and working in the public interest?

6:20
Absolutely, Kate.

6:21
I think for many audit firms there is still somewhat the tendency to report on culture mainly as the employee experience, as this is such an important part of their recruitment and retention strategy.

6:32
But more than this, firms could explain more on how the culture align with the firm's overall purpose and that being the serving of the high quality audit and serving the public interest.

6:44
And perhaps one other important thing that I think that's not many companies or audit firms consider in their reporting is actually how they assess the risk of behavioural aspects within the culture and how that would lead to their achieving their success or would prevent them from the success of achieving their purpose.

7:04
It's a really interesting point, Anneke, because you're right, it's about behaviour.

7:08
I mean, you can't click a switch on and off saying, right, we've got a good culture now we don't have a good culture.

7:13
And so I guess the way in which companies are reporting to Lauren's point, you know, the more where it's linked to something solid and outcome a process rather than there we say empty words, that is going to be more meaningful.

7:26
But looking at the interaction between companies and audit firms now, I'm incredibly important to each other.

7:32
But why would a companies culture be of interest to the auditors?

7:35
Starting with you, Anneke.

7:36
And I guess vice versa for you, Lauren.

7:39
So from my perspective and from the regulator's perspective, quality audit plays a key role in supporting the stability and the trust in the financial markets that the public has in the financial markets and other stakeholders.

7:52
And to this point, there is that interdependency between audit firms and companies.

7:57
A deep appreciation is really required of the importance of reliable financial information and the value that the audit teams challenge brings in supporting the preparation of such information.

8:11
I mean, Lauren, we're a long way from times where people did say, you know, here are the financial results.

8:16
It's the board using the corporate governance code to operate in a way that they can give assurance to stakeholders by signing off well prepared on actual statements, but also about the way the companies run the vision and strategy for the company is almost as important to all stakeholders.

8:33
Yeah, and I think, Anneke, you summed up really well there.

8:35
And I think we would just encourage companies to be open and have that same element of transparency in their reporting as they do with their auditors.

8:45
Things are really interesting discussion, Lauren and Anneke, because I think, you know, in a world where there may be some people think there are too many buzzwords, there's too many things to consider from what you've both said, culture, being able to explain it, but more importantly, being able to demonstrate it in action is really at the beating heart of both successful companies and audit firms.

9:07
And I think it's one of those things that if the culture is being lived and if directors and audit firms are actually living this culture, then reporting on it should really be very straightforward.

9:18
Absolutely.

9:18
And Anneke, I think it's been great to hear from you from the audit firm angle, but how important it is for audit firms and companies to be working from the same place on this important topic.

9:31
Absolutely.

9:31
Thanks, Kate for the opportunity.

9:33
It is that very important legs of the three legs too, if you can call it that way and way.

9:39
The auditors, the company and in the audit committees, in fact, really need to work together to bring reliable information to support the markets.

9:48
Well, thank you, Lauren, and thank you, Anneke.

9:50
Delight.

9:51
This is the first in our series on some of the really important and perhaps maybe more nuanced elements of the Corporate Governance Code of 2024.

10:00
So look forward to hosting the podcast to come.

10:03
And thanks to Lauren and Anneke for your time today for having us.

10:07
Kate, thank you.