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Framework and Process for the Development of Standards, Codes and Guidance
The FRC does not accept any liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.
© The Financial Reporting Council Limited 2025
The Financial Reporting Council Limited is a company limited by guarantee. Registered in England number 2486368. Registered Office: 13th Floor, 1 Harbour Exchange Square, London, E14 9GE
1. Introduction
1.1.The FRC sets Codes, Standards and related Guidance to deliver on its policy objectives. Each policy document operates slightly differently. This document does not cover FRC procedural guidance.
1.2.Codes are principles based and can differ in their application and the reporting required. Stakeholders following a Code apply its Principles and, though reporting mechanisms vary, stakeholders are encouraged to explain their approach to fulfilling the Principles tailoring the reporting to reflect their individual circumstances. Codes can be either voluntary or mandatory depending on their regulatory underpinning. Non-prescriptive guidance can support reporting.
1.3.Standards set mandatory requirements that have to be followed. In many cases these have a legal or regulatory underpinning. The requirements are supported by application material to support the consistent use of the standard by reporters, auditors or assurance providers and actuaries. Standards are principles based and require the application of judgement.
1.4.Guidance is developed by the FRC to support good practice, to address concerns raised by stakeholders, or at the request of government or other regulators. Guidance should be developed sparingly, and is non-prescriptive. Publications which share our expectations, such as thematic reports, may also be viewed as containing guidance.
2. Purpose
2.1.As part of the FRC's commitment to effective and proportionate regulation this document sets out how we set, revise and maintain Standards, Codes and Guidance and the due process we follow when doing so. Due process is important because it requires that we are consistent and transparent in the approach and process we follow when we set requirements and expectations, including but not limited to our engagement with stakeholders.
2.2.Access to high quality and trustworthy information, which supports decision making by investors in financial markets and by other stakeholders, supports economic growth. Our work underpins public confidence in corporate reporting, corporate governance, stewardship, audit and actuarial work through the provision of Codes, Standards and Guidance in these areas. Our regulatory approach is intended to facilitate this without creating unnecessary burdens for business.
2.3.The Framework set out in this document includes practices relevant to any other activity where the FRC sets expectations more broadly. In particular, references to activities such as informal consultations may inform outputs from our supervisory work, such as thematic reviews developed to share good market practice.
3. Consultation
3.1.All of the FRC's work is conducted with the public interest front and centre. As part of this we seek feedback from relevant stakeholders on proposed new Standards, Codes and Guidance as well as proposed amendments to existing ones.
3.2.Our work impacts a large and diverse range of stakeholders, some of which have greater capacity than others to engage with us. It is important that we recognise this and do not prioritise the interests of one particular stakeholder group but instead conduct our Standards setting, and develop Codes and Guidance, in the greater public interest
3.3.A consultation process helps us to understand the viewpoints of our stakeholders, and helps us develop Codes, Standards and Guidance in a way that responds to the needs of our stakeholders. The process supports the evidence from our monitoring of the quality of audit, corporate reporting and actuarial work, which demonstrates how well our codes, standards and guidance are applied and implemented in practice.
3.4.The FRC's usual practice is that new Standards and Codes, and revisions to existing ones, are subject to a formal written consultation exercise. The consultation period which, other than in exceptional circumstances, will be of not less than 12 weeks. Guidance documents may also be subject to a formal written consultation.
3.5.Where exceptional circumstances are considered to apply, a shorter consultation period may be appropriate. A shorter period will be subject to approval by the Executive Committee. The following circumstances are examples of when a shorter period may be appropriate:
- The revision reflects change in legislation; or
- Another event has occurred which makes the revision urgent; or
- The revision has been previously trailed as part of a formal consultation; or
- The revision does not change the substance of the standard.
3.6.Responses will be published in line with the FRC's Consultation Responses Policy.
3.7.The FRC also engages in informal consultation for example in the form of roundtables, webinars and one to one meetings.
3.8.We act fairly when assessing the feedback to a consultation, balancing the comments received from different stakeholder groups. We will carefully consider the points raised and determine the extent to which they should be reflected in the revised Standard, Code or Guidance. In assessing the feedback, we do not simply consider the numbers of responses received and the strength of feeling contained within them. Instead, we consider them from a public interest perspective and, to the extent possible, attempt to balance the interests of different stakeholder groups so that material we develop reflects the needs of all stakeholders and not just a subset of them.
3.9.A feedback statement will be published on the FRC website on or before the issue date of the new Standard, Code or Guidance document summarising the feedback received and explaining how it was addressed.
4. Reviews of existing materials
4.1.It is important that we are aware of our existing requirements and consider whether they remain accurate and necessary. Existing Standards, Codes and Guidance are subject to periodic review and in some cases we may commence a formal Post-Implementation Review. This might be in cases where a new Standard, Code or piece of Guidance differs significantly from what came before it. It might also be triggered where our supervisory or enforcement work has identified issues with the understanding or application of a Standard or piece of guidance.
4.2.When a Post-Implementation Review commences it will be subject to a formal consultation process as outlined above. We may also engage in informal consultation to gather evidence, to include alongside that we get from Supervision and Enforcement.
4.3.The findings of the Post-Implementation Review will be published on the FRC website together with details of any action we propose to take as a result.
Financial Reporting Council March 2025
5. Appendix
Sample due process timeline
| Week | Event |
|---|---|
| Week 1 | Draft document issued with details of how to respond |
| Weeks 1 - 12 | Stakeholder outreach – may include roundtables, webinars, 1-2-1 meetings etc |
| Week 12 | Consultation closes |
| Week 14 | Consultation responses published |
| Week 18-22 | Final version of the document issued together with a feedback statement explaining how the responses were addressed. |
Financial Reporting Council
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