Regulatory Standards and Codes Committee procedures
Published: 25 September 2023
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These procedures are intended to ensure transparency and consistency in the development and review of codes, standards and associated material.
These procedures are intended to ensure transparency and consistency in the development and review of codes, standards and associated material. The procedures are subject to alteration at the discretion of the Board or its Regulatory Standards & Codes Committee, if all the circumstances are deemed to warrant it.
The FRC’s Codes & Standards activities include setting and maintaining Codes, Standards, Statements of Practice and Guidance in accordance with its [1]:
Examples include:
- Actuarial Standards (TASs and TM1)
- Auditing and Other Public Interest Engagement Assurance Standards
- Financial Reporting Standards (and any associated Implementation Guidance)
- FRC Ethical Standard
- Governance and Stewardship Codes
- Guidance for Auditors (e.g. Bulletins)
- Practice Notes
Development
A topic may be identified as requiring the issue or amendment of a Code, Standard, Statement of Practice or piece of Guidance by the Board, the Regulatory Standards & Codes Committee or the FRC Executive. Following such identification the FRC Executive assesses whether it would be appropriate for the FRC, taking account of its [2], to develop new or revised material. It undertakes any necessary research and consultation on the relevant conceptual issues, existing pronouncements and practice in the United Kingdom, the Republic of Ireland and overseas and the economic, legal and practical implications of the introduction of particular requirements. The outcome of the research is presented to the Regulatory Standards & Codes Committee for debate, refinement of the issues and advice. The Board may debate and refine the issues further.
Consultation
The FRC obtains feedback on its proposals though a variety of means, both formal and informal. The form and length of consultation will depend upon the nature and status of the material being developed and will be decided in accordance with the FRC’s Framework for the Development of Codes, Standards, Statements of Practice and Guidance. Formal consultation will normally last 12 weeks, save when an urgent response is required or when there is good reason to shorten or lengthen this. On occasion, circumstances may make a formal written consultation unnecessary. Guidance comprising contextual and educational material will not normally be consulted on formally, but may be subject to informal stakeholder outreach.
When the issue requires wider debate prior to the development of firm proposals an initial consultation document may be published and/or outreach conducted with interested parties.
An exposure draft of a Code, Standard, or, when relevant, Guidance is prepared by the FRC Executive which takes into account the results of outreach with interested parties undertaken in support of the project. The exposure draft usually contains, or is supported by, a consultation document which includes a discussion of the key issues requiring consideration and input, a draft impact assessment and consultation questions.
The exposure draft is discussed with the Regulatory Standards & Codes Committee. Any matters of principle and/or significant issues arising from the proposed exposure draft or resulting from discussion by the Regulatory Standards & Codes Committee are referred to the Board.
Following discussion by the Regulatory Standards & Codes Committee or the Board, and any amendment to reflect those discussions, the exposure draft is published to allow an opportunity for all interested parties to comment on the proposals and for the FRC Executive and Regulatory Standards & Codes Committee to gauge the appropriateness and level of acceptance of the proposals and to advise the Board.
All responses to public consultation exercises undertaken by the FRC will be published on the FRC’s website, unless the respondent has requested confidentiality.
Following consideration of the responses to the public consultation and any refinement of the proposals, there may follow another period of public or selective exposure prior to submitting final proposals to the FRC Board for consideration and approval. The final approved document will usually be published with a feedback statement which sets out a summary of the responses received to the consultation, how the FRC has responded to the consultation, and any significant changes that have been made as a result.
Although the views of interested parties are weighed carefully, the ultimate content of a Code or Standard must be determined by the FRC after balancing all the evidence from research, public consultation and careful deliberation about the benefits and costs of the proposed Code or Standard.
Governance and Voting
Any proposal to issue, amend or withdraw a Code or Standard will be put to the FRC Board with the full advice of the relevant FRC Executive and the Regulatory Standards & Codes Committee.
Ordinarily, the Board will only reject the advice put to it where:
- it is apparent that a significant group of stakeholders has not been adequately consulted;
- the necessary assessment of the impact of the proposal has not been completed, including an analysis of costs and benefits;
- insufficient consideration has been given to the timing or cost of implementation; or
- the cumulative impact of a number of proposals would make the adoption of an otherwise satisfactory proposal inappropriate.
A decision by the FRC Board to issue, amend or withdraw a Code or Standard requires two thirds of the total number of directors holding office at that time to vote in favour of the resolution at a meeting or by email when decision is sought by written resolution.
If the Board rejects the advice of the FRC Executive or the Regulatory Standards & Codes Committee, it will explain its reasons and the FRC Executive will consult further with relevant stakeholders and/or the Regulatory Standards & Codes Committee before presenting further advice to the Board. In the event any such differences of view remain unresolved, the nature and reasons for such differences of view will be made public.
The summary of minutes of the FRC Board will be published. They will record the discussion and the views expressed.
Publication
The issued or amended Code or Standard will be published on the FRC website, and any withdrawn Code or Standard will be identified as such. A press notice or a note to subscribers will be published and any relevant authorities will be informed.
The FRC may from time to time publish on its website staff working papers. The working papers will be published for information and will not be subject to a consultation process.
Statements of Practice
Statements of Practice (e.g. Practice Notes and Statements of Recommended Practice (SORPs) are intended to assist entities/practitioners in applying Standards of general application to particular circumstances or specialised industries/sectors.
Some Statements of Practice, such as Practice Notes, may be issued by the FRC.
In addition, the FRC may recognise third parties for the purposes of developing Statements of Recommended Practice (SORPs) in support of the FRC’s Standards in accordance with its [3]. As set out in the Policy the SORP-making body issues the SORP, which carries a statement from the FRC.
In both cases, a consultation document and/or exposure draft will normally be published, as part of the development process, in accordance with the FRC’s Framework for Developing Codes, Standards, Statements of Practice and Guidance, and/or its Policy on Developing Statements of Recommended Practice (SORPs). For SORPs, consultation documents are issued by the SORP-making body.
Statements of Practice (e.g. Practice Notes and Statements of Recommended Practice (SORPs) are intended to assist entities/practitioners in applying Standards of general application to particular circumstances or specialised industries/sectors.Some Statements of Practice, such as Practice Notes, may be issued by the FRC.In addition, the FRC may recognise third parties for the purposes of developing Statements of Recommended Practice (SORPs) in support of the FRC’s Standards in accordance with its Policy on Developing Statements of Recommended Practice (SORPs)3. As set out in the Policy the SORP-making body issues the SORP, which carries a statement from the FRC.In both cases, a consultation document and/or exposure draft will normally be published, as part of the development process, in accordance with the FRC’s Framework for Developing Codes, Standards, Statements of Practice and Guidance, and/or its Policy on Developing Statements of Recommended Practice (SORPs). For SORPs, consultation documents are issued by the SORP-making body.
Consultation meetings
Public consultation meetings are not required routinely, but may be held depending on the significance and/or complexity of the proposed Code or Standard. When such a meeting is held, a record of the discussion will be published on the FRC website.
FRC Approach to Impact Assessments
FRC Consultation Responses Policy Statement