The report on SME corporate governance draws on the views of members of its global forum for SMEs, which also incorporates discussions held during a seminar held by the Economic and Social Research Council (ESRC).

These showed that while in larger organisations corporate governance is primarily tasked with ensuring that management acts as shareholders’ agents, for SMEs it is mainly about improving business performance and managing risk.

As a result, established corporate governance frameworks and codes that have been developed with large, listed companies primarily in mind do not necessarily reflect the realities of running a small business.

Rosanna Choi, chair of the ACCA global forum for SMEs, said: ‘Governance issues are nevertheless of critical concern to small businesses, where owners may often be its managers as well, or where company ownership may be shared across family members. Sometimes the line between business and personal interest can be blurred. Corporate governance should establish clear roles and responsibilities for each individual and as such is relevant to businesses of all sizes.’

The ACCA report, Governance for all: the implementation challenge for SMEs, details why corporate governance matters for SMEs; how good corporate governance looks for these businesses and how they can benefit from them; the value and impact of boards; the triggers of change and the challenges of introducing corporate governance.

It outlines a number of key findings. They include the need for clear reporting lines and clarity about how decisions are made and risks controlled, and about other matters that need to be brought to the board’s (or committee’s) attention for review or approval.

The report says any incentives for staff need to be supportive of board strategies, and there needs to be clear communication by board to management and staff about issues such as strategic goals and expected behaviour.

Boards need to have good visibility of management actions and decision making, which includes the provision of high quality information on business performance and risk management, while appropriate internal controls should be established, related to key risks.

Choi said: ‘For corporate governance to work in small businesses the framework needs to take into account the diverse needs for them – they are not all run in the same way.

‘Advisers and international institutions, such as ACCA, need to also help by campaigning for the cause of why corporate governance matters to SMEs – this is vital for creating a receptive environment and overcoming barriers to action.’

The ACCA report is here