FRC on track to become a new, more resilient regulator

News types: Corporate Reports, Operating Procedures, Policies and Responsibilities, Policy Statements, Publications, Statements

Published: 23 July 2021

The Financial Reporting Council (FRC) has today published its Annual Report and Accounts . This looks at the progress made over 2020/21 and the next steps in delivering a programme of transformation towards the new robust and independent regulator, The Audit, Reporting and Governance Authority (ARGA) as set out in the Government’s White Paper ‘Restoring trust in audit and corporate governance’, published on 18 th March 2021.

During a year dominated by the challenges presented by the pandemic, the FRC supported stakeholders by issuing consolidated Covid-19 guidance for companies and auditors while continuing to influence the development of international standards, including for climate and wider ESG reporting. Significant development has also been made in the following areas:

  • Improving delivery: The FRC have established an integrated transformation programme to address the 155 recommendations of the three independent reviews from Sir John Kingman, Sir Donald Brydon and the Competition and Markets Authority.
  • Transforming organisational capacity and capability: The FRC has strengthened its supervision of audit firms to promote better audit quality, supporting firms as they took the first steps towards operational separation of their audit businesses, set up a competition policy team and created a new stakeholder engagement and corporate affairs function.
  • Listening to and engaging more with stakeholders:  The FRC continues to focus on reflecting stakeholder views and concerns in its work. It is doing this through a more extensive and holistic stakeholder engagement programme. This more extensive programme will improve transparency, outreach and intelligence gathering to help the FRC deliver its strategic objectives.

Sir Jon Thompson, FRC CEO, said:

“The improved capacity, capability and processes that the FRC delivered in 2020/21 have moved us towards becoming the fit-for-purpose regulator that Sir John Kingman envisaged and provides a firm foundation on which to build further. We need to continue to build our resilience, provide quality standards, supervision and support to stakeholders and the regulated community. We also need to increase the pace of change to deliver on the package of reforms that Government has put forward in its White Paper.”

A strong regulator is key to creating trust in the quality of corporate governance, corporate reporting and audit which in turn builds stakeholder confidence in corporate behaviour and reporting. Therefore, the FRC will continue to work with BEIS to support the policy-making necessary to develop the legislative proposals following the consultation period.

Full report