The Financial Reporting Council (FRC), the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance, today published its finalised Strategic Framework and its Plan for 2007/08. The two documents are available on the FRC website at http://www.frc.org.uk/publications/pubs.cfm.

The Strategic Framework and Plan take account of the feedback received on the FRC’s Draft Updated Regulatory Framework and Plan & Budget 2007/08, published in December 2006. The responses to the consultation indicated broad support for the FRC’s proposals and relatively few changes have been made to the Framework and Plan. The FRC has published on its website a statement summarising the feedback received, and the FRC response.

Strategic Framework

The Strategic Framework sets out the outcomes that the FRC believes contribute to confidence in corporate reporting and governance. It defines these outcomes in relation to six key areas: corporate governance, corporate reporting, auditing, actuarial practice, the professionalism of accountants and actuaries and the FRC’s own effectiveness as a regulator.

It is in the nature of the FRC’s role that while some of the elements set out in the Framework are principally the responsibility of the FRC, most depend principally on market participants or other agencies. The FRC sees the Framework as a way of facilitating co-operation between its wide range of stakeholders to promote well-founded confidence in corporate reporting and governance in the UK.

Plan for 2007/08

The activities and projects which the FRC propose to undertake in 2007/08 are derived from its Strategic Framework. They are intended to contribute to the achievement over the medium term of the outcomes set out in the Framework.

The key themes of the FRC’s Plan for 2007/08 are that it will:

• Lead public debate in the UK on the major issues affecting confidence in corporate reporting and governance
• Monitor corporate reporting and governance practices in the UK and take enforcement action where appropriate
• Increase participation in the development of international standards and co-operation with international regulatory organisations
• Contribute to modifying the UK regulatory regime to take account of changes in European and UK legislation.

There is considerable continuity in these themes from the key features of the FRC’s Plan & Budget for 2006/07.

A small number of projects have been added to the Plan in response to suggestions from stakeholders, including a review of the scope for providing guidance on the application of the Companies Act 2006 provisions relating to auditor liability limitation agreements. As announced on 18 April, the FRC has confirmed that the focus of its review of the impact of the Combined Code on Corporate Governance will be the progress made in implementing the Code, with no presumption that the review will lead to changes to the Code.

Commenting on the Strategic Framework and Plan for 2007/08, FRC Chief Executive Paul Boyle said:

“Our Strategic Framework defines the outcomes we believe that we and our stakeholders should be working towards to promote well-founded confidence in corporate reporting and governance in the UK. We welcome the positive and constructive feedback we have received from our stakeholders, which we have taken into account in finalising the Framework.

Our Plan for 2007/08 is based on the Strategic Framework and also takes account of stakeholder feedback. We have included some additional projects in response to stakeholder suggestions, most of which involve us providing additional guidance on specific aspects of corporate reporting and governance.”

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance.
2. The FRC’s functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy Investigation and Discipline Board) and by the Council. The Committee on Corporate Governance, whose members are drawn from the Council, assists it in its work on corporate governance.
3. The additional projects included in the Plan for 2007/08 in response to feedback on the draft Plan published in December 2006 are as follows:
   
   • Develop guidance, as necessary, in regulation to changes in the Companies Acts relevant to the meaning of adequate accounting records.
     
   • Consider and revise, as necessary, UK accounting standards in the light of the UK implementation of the 2006 Amendments to the 4th and 7th Directives.
     
   • Review the scope for providing guidance on the application of the Companies Act 2006 provisions relating to auditor liability limitation agreements.
     
   • Consider the impact of the Companies Act 2006 on auditors’ reports and the Audit Quality Forum’s proposals for additional information to be included in such reports.
     
   • Develop key performance indicators related to the Strategic Framework.
     
     
4. The FRC is currently consulting on proposed changes to its governance structure. The Plan includes a project to implement the agreed changes.
5. Press enquires should be directed to: David Andrews, telephone 020 7492 2382 or email d.andrews@frc.org.uk.