The FRC has today published a guide to UK and Irish companies registered with the US Securities and Exchange Commission (SEC) on the use of the Turnbull guidance when complying with US requirements to report on internal controls over financial reporting.

UK and other foreign registrant companies need to comply with the SEC requirements for reporting years ending on or after 15 July 2005.

Announcing the publication Richard Fleck, chairman of the FRC review group that produced the guide, said:

?The SEC has identified the Turnbull guidance as an appropriate framework for evaluating the effectiveness of internal controls over financial reporting. This does not reduce the requirements on companies, but it provides a useful flexibility for UK and Irish companies that are listed or considering listing in the US. This guide summarises those requirements and explains how the Turnbull guidance can be used as a starting point to address them?.

1.                  The Financial Reporting Council (FRC) is a unified, independent regulator.  Its mission is to promote confidence in corporate reporting and governance.  The FRC incorporates five subsidiary boards: the Accounting Standards Board, the Auditing Practices Board, the Financial Reporting Review Panel, the Accountancy Discipline and Investigation Board and the Professional Oversight Board for Accountancy.

 2.         As a result of section 404(a) of the US Sarbanes-Oxley Act 2002, SEC registrant companies are required to prepare a report on internal control over financial reporting. Details of how to comply are set out in SEC Rule 33-8238. Foreign registrant companies need to comply for reporting years ending on or after 15 July 2005.

3.         These reports on internal controls must include, amongst other things, a statement identifying the framework used by the company?s management to evaluate the effectiveness of internal control over financial reporting. The SEC has stated that the Turnbull guidance provides a suitable framework.

4.        The guide was produced by a review team comprising Richard Fleck (chairman of the Auditing Practices Board), John Coombe (GlaxoSmithKline), and Michael Hughes (KPMG), and takes account of comments received during public consultation.  The guide can be found at http://www.frc.org.uk/corporate/

5.         The FRC is separately reviewing the Turnbull guidance in the light of experience in implementing the guidance and developments in the UK and internationally since 1999 to see whether it needs to be updated. Consultation on this review began on 2 December. More details can be found at http://www.frc.org.uk/press/pub0657.html

6.         All Press enquires should be directed to Chris Hodge on Tel: 020 7492 2381 or e-mail: c.hodge@frc.org.uk.

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