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FRC Annual Report 2024/25 Summary
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Financial Reporting Council
Sir Jan du Plessis
Chair
This year's Annual Report and Accounts truly reflects the amount of progress that has been made. Our new 3-Year Strategy 2025-28, published in March, demonstrates our commitment to being at the forefront of protecting the public interest and underpinning trust and confidence for our stakeholders.
A strong and vibrant UK business environment is built on three pillars: well-run companies with strong governance arrangements producing high-quality disclosures, a system of external assurance which ensures investors have the confidence to place their capital in the UK, and a regulator that maintains the high standards required to support this. Our colleagues across the FRC aim to live up to this every day through our values, our purpose, and our objectives.
When regulation is designed well, it can fulfil our purpose of serving the public interest and supporting economic growth, by upholding high standards of corporate governance, corporate reporting, audit and actuarial work.
Richard Moriarty
CEO
We must still ensure that regulation remains proportionate, necessary, and fit for purpose. We share the government's priority in maintaining the UK's status as a global destination to build and scale a business. Access to capital and broader stakeholder support, and access to quality audit, alongside good corporate governance and reporting, underpins domestic and investor confidence, which in turn supports well-run companies in more readily accessing the capital they need to grow and create jobs and wealth in every community and region of the UK.
We have supported this through changes to the UK Corporate Governance Code, giving investors confidence and certainty to invest in the UK, and our review of the Stewardship Code, which plays a vital role in promoting long-term value for millions of people. The recent pilot phase of our actuarial monitoring programme allowed us to assess the effectiveness of the application of actuarial standards, ensuring they are proportionate and outcomes focused.
In addition, our work relating to audit recognises that while the UK compares favourably internationally, it is still a key priority for us to enhance the resilience of the UK audit market. We continue to drive for continuous improvement to ensure that quality improves across the whole of the market. We have also continued to progress our programme of memoranda of understanding with overseas regulators for mutual recognition of professional qualifications, supporting the UK profession's skill base and resilience, reducing unnecessary burdens on auditors and supporting UK firms and professional bodies to trade globally.
Through all of this, to fulfil our role as an improvement regulator we will continue to look at how we can maintain high standards while reducing regulatory burden.
Our renewed purpose
The purpose of the FRC is to serve the public interest and support UK economic growth by upholding high standards of corporate governance, corporate reporting, audit and actuarial work.
This year, we made three changes to our previously stated purpose:
- To better reflect the increased focus the government has placed on regulators supporting economic growth.
- To make explicit the breadth of our remit across professions, which includes actuaries in addition to auditors and accountants.
- Removed the previous reference in our purpose to '[holding to account those responsible for delivering] high standards of governance, financial reporting and audit'.
Our objectives
Building trust brings better outcomes for all stakeholders
This diagram illustrates a circular flow, starting with a "Strong independent regulator underpinning the system". This leads to "Rigorous audit", "Acting in the public interest", and "Better outcomes for all stakeholders", which in turn supports "Better governance", "Better reporting quality", and "Engaged investors". The outer ring highlights "Market confidence" influencing "Acting in the public interest".
Objective 1
The standards and expectations we set will enhance corporate governance, corporate reporting and investor stewardship in a manner that supports UK economic growth and investment.
Objective 2
Our proportionate regulation of accounting, audit, assurance and actuarial work will expect and encourage high quality by those responsible, acting as an improvement regulator and dealing effectively and fairly with cases where there are significant or serious shortcomings.
Objective 3
We will build on our deep understanding of corporate reporting and the audit and actuarial markets we oversee, and by being agile, we will identify and prepare for opportunities and challenges on the horizon.
Objective 4
We will be a modern organisation – continuously learning, improving, and considered by others as a respected, effective and highly engaged regulator and by our colleagues as an inclusive and great place to work.
The Four Faces
System partner Educating, collaborating, and supporting continuous improvement
Facilitator Encouraging good practice through structured engagement
Supervisor Supervision and monitoring of requirements, culture and behaviours
Investigator and enforcer Investigating and enforcing conduct and applying proportionate sanctions
Highlights 2024-25
- Formal creation of our Market Intelligence & Insights (MII) and Digital Reporting & Taxonomies (DRT) teams
- Launch of our market study into the audit market for NHS providers and Integrated Care Boards
- Opening of FRC Birmingham office, now accounting for 10% of our overall workforce
- Public consultation on proposed revisions to the Stewardship Code
- FRC assumed governance of the Wates Principles for Large Private Companies
- Launch of campaign to support UK Small and Medium-sized Entities (SMEs) to grow and scale
- Final report from our Assurance of Sustainability Reporting Market Study
- Public beta launch of the Digital Reporting Viewer, a tool designed to improve free access to structured company reporting data
- Move of FRC London office to Harbour Exchange
Financial summary
As a result of cost savings and higher than forecast receipts from our levies, the FRC ended 2024/25 with an overall surplus of £2.0m. In March 2024, the FRC Group set an overall budget for 2024/25 of £71.5m. Of this, £66.5m was for operating costs and £5.0m for the estimated costs of enforcement cases.
Our actual overall expenditure in 2024/25 was £67.8m. Actual core operating expenditure for the FRC Group during 2024/25 was £63.5m (£3.0m under budget).
Core cost 2024/25 actual (£m)
- 40.8 Supervision
- 7.9 Regulatory Standards
- 6.0 Enforcement core
- 5.2 UKEB
- 4.3 Audit and accountancy case costs
- 3.6 Actuarial standards and regulation
- 67.8 Total
Funding by group 2024/25 total £69.9m
- £32.8m Accountancy bodies and audit firms (47%)
- £25.1m Preparers (36%)
- £3.6m Actuarial funding groups (5%)
- £4.1m Other (6%)
- £4.3m Case costs* (6%)
Read the full FRC Annual Report and Accounts on our website.
Key projects this year
SME market study
Through our engagement with stakeholders across business and the audit profession, it's clear to us that some SMEs face challenges in securing audit services at a proportionate cost, potentially impacting their ability to grow. We've therefore been considering how the audit market is working for SMEs, and how we can embed the principle of proportionality for SME audits.
In January 2025, we launched a campaign to support UK SMEs to grow and scale, aiding in accessing audit services and reducing reporting burdens where possible. We want to see how we can help audit firms apply audit standards proportionately for smaller, lower risk and less complex companies, and so we are carrying out a market study on SMEs, providing guidance to support the proportionate audit of SMEs, as well as providing support materials for the companies themselves.
In July 2025, we published emerging findings from our market study, and launched a consultation on new guidance to help auditors deliver more proportionate audits of these businesses.
End-to-end enforcement process review
To build on the progress we have made in recent years, we want to continue to anticipate the challenges and opportunities in the markets we regulate and adapt our approach of being a modern and agile regulator. The end-to-end enforcement process review is considering, consulting on and refreshing our end-to-end enforcement processes and procedures, from initial case assessment to publication of outcomes.
The review includes governance structures, decision-making processes, and operational efficiency and effectiveness (including approaches adopted by analogous independent regulatory authorities). As such, the project straddles the work of Supervision, Enforcement and our Legal Services team. The aim is to make sure that our procedures and processes continue to be efficient, effective and proportionate, including in terms of offering a graduated range of regulatory responses. Proposals will be considered in the context of their ability to deliver improvements in timeliness while continuing to meet regulatory objectives.
This work positions us strongly for the future, ensuring our processes continue to be efficient, effective and proportionate, and that they encourage improvement and high-quality standards.
Future of Audit Supervision project
The Future of Audit Supervision project is undertaking a comprehensive review to evolve our Audit Supervision regulatory model. Our regulatory process will reflect the current and future challenges of the audit market as well as embrace the emerging opportunities in the market.
There will continue to be a need for robust inspection and for the FRC to report on the performance of firms for public and investor interest. However, our Supervision team will also leverage the tools that already exist to enable firms to take greater ownership and accountability of their continuous improvement journey, such as their own systems of quality control and assurance (ISQM (UK) 1). The programme is considering the opportunities presented by the new standard of quality management (ISQM (UK) 1), the appropriate supervisory activity and engagement or firms across the whole audit market, and the proportionality of supervisory focus between a Responsible Individual and an audit firm's leadership and management.
Get in touch
London office: 13th Floor, 1 Harbour Exchange Square, London, E14 9GE
Birmingham office: 5th Floor, 3 Arena Central, Bridge Street, Birmingham, B1 2AX
+44 (0)20 7492 2300 www.frc.org.uk Follow us on Linked in