Consultation on governance changes to enforcement and operating procedures
News types: Consultation Announcement, Operating Procedures, Policies and Responsibilities
Published: 30 September 2020
The FRC has opened an 8 week consultation on consequential changes to various aspects of its Enforcement and Operating Procedures arising out of changes to the governance structure and decision making intended to take effect on 1 January 2021.
Following Sir John Kingman’s recommendations, the FRC Board has reviewed its sub-board governance structure and decision making in relation to enforcement investigations and intends a number of governance changes to take effect on 1 January 2021.
Key drivers behind the changes are to enhance the FRC’s effectiveness, speed and responsiveness, shift the organisation to an ‘Executive Led’ approach; reduce layers of management and Committee review, create clearer accountability and align the governance structure with a new FRC business model and management structure.
The Board will be supported by a new Supervision Committee alongside the Conduct and Codes and Standards Committees and the sub-committee structure (including the Councils, Case Management, Audit Quality Review and Corporate Reporting Review Committees and Financial Reporting Review Panel) will be removed and replaced with a broad Advisory Panel that the Executive and Board Committees can call upon for specialist advice and input on a targeted basis. Senior Advisors will be appointed for a set number of days a month and will sit as standing advisors to the three regulatory Board Committees (Codes & Standards, Conduct and Supervision) and be available to advise the Executive.
The decision to open an investigation under the Audit Enforcement Procedure (AEP) and the Accountancy and Actuarial Schemes will now be a decision of the Board, albeit with a scheme of delegation to permit the Conduct Committee to continue to open investigations except where the case is of particular significance or public interest. Guidance will be provided on the circumstances in which investigation decisions should be retained by the Board.
The above changes require minor consequential amendments to a number of the FRC’s regulatory procedures. As these include procedures which are usually put to public consultation when changes are proposed, the FRC invites public views on the consequential amendments. More detail is available in the consultation document which annexes the proposed changes to the relevant procedures. Consultation responses are invited by 30 November 2020 to [email protected] .