News March 2015 FRC issues its Plan and Budget for 2015/2016

FRC issues its Plan and Budget for 2015/2016

25 March 2015

PN 19/15

The Financial Reporting Council (FRC) has today published its Plan and Budget for 2015/2016 (PDF). The Plan confirms the FRC’s mission, highlights progress on its three year strategy for 2013/16 and sets out its priorities for the coming year.

FRC CEO Stephen Haddrill said:

“The coming year will see the completion of the three year strategy we embarked on in 2013. We have already seen major goals achieved. Auditor reporting has improved and adds greater value for investors.

Long termism has been stimulated by the introduction of new viability statements, and the strengthening of the UK Corporate Governance Code's provisions on board pay. In the year ahead we will focus on company culture and board succession planning further to promote more forward thinking.

2015/16 will also be a year of change in the way we go about our work.  The implementation of the EU Audit Directive and Regulation requires us to review our audit standards and will broaden the scope of our audit inspection work considerably.  This comes on top of CMA requirements for an expansion of audit inspection.  We are therefore undertaking a thorough review of how we undertake much of our conduct work to ensure we are fit for this new future.'

The FRC will focus on the following areas in 2015/16:

  • Corporate governance – Focus on company culture and how to promote good practice and on company succession planning. 
  • Investor stewardship - Support better engagement between boards and shareholders and ensure that Stewardship Code signatories deliver on their commitments.
  • Corporate reporting - Promote reports that are fair, balanced and understandable, and also clear and concise; and continue to help smaller listed and AIM companies with the quality of their reporting.   
  • Actuarial standards and regulation - Finalise the project to identify and respond to public interest actuarial risks and further work on technical actuarial standards
  • Audit - Support the Department for Business, Innovation and Skills (BIS) in implementing the amended EU Audit Directive and Regulation, and continue the programme of work to promote audit that is of a consistently high standard and meets investor needs.
  • Conduct - The FRC will consider the overall effectiveness of its work to review the quality of corporate reporting and auditing; and continue to enhance the pace and effectiveness of our independent disciplinary arrangements.

During 2015/16 the FRC will take on a number of additional responsibilities as a result of the Competition and Markets Authority (CMA) recommendations and the EU Audit Directive and Regulation. These will require the expansion of some FRC teams and widen the range of the work to monitor audit quality.

During 2015/16 the FRC will develop its next three year strategy, for 2016/19, and will consult stakeholders on the areas on which it should focus and on its regulatory approach.

Budget

The FRC’s budget for core operating costs will increase by 6% to enable it to deliver its priorities and support the Department for Business, Innovation and Skills in preparing for the implementation of the new EU Audit Directive and Regulation. The amount raised through the preparers levy will increase by 6.1%. In response to stakeholder feedback on the Draft Plan & Budget the increase in the minimum levy will be limited 3. 2%. The levy payable by larger organisations will vary according to their market capitalisation (or, where applicable, turnover). The contribution from the accountancy professional bodies will increase by 2.5%.

The budget for audit quality reviews will increase by 12.5% in response to the Competition and Market Authority requirements.

Notes to editors:

The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.

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Alana SinnenCommunications Manager