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FRC record of Open Meeting on 29 January 2014

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05 Feb 2014

The Financial Reporting Council (FRC) has published the transcript and proceedings of the Open Meeting held on Wednesday 29 January 2014. The meeting gave stakeholders the opportunity to put questions to the FRC including commenting on the FRC priorities for 2014/15.

Stephen Haddrill, Chief Executive Officer, provided an update on the current environment of corporate governance, reporting and auditing against the FRC strategic priorities for 2013/16 and also discussed the FRC priorities for 2014/15.  

In terms of the current environment of corporate governance and reporting the FRC commented that: 

  • The standards of corporate governance and reporting were high amongst “most large companies” but there were still areas that needed to be addressed such as the quality and effectiveness of internal controls and risk and lack of clarity in reporting of strategy, business models and risks;
  • There are still “concerns” over the quality of reporting by smaller and AIM listed companies;
  • There is “considerable room for improvement” of engagement by investors with companies;
  • The quality of auditing was “improving but remained variable overall”, with “concerns” over the banking sector being addressed (link to FRC website); and
  • There are questions over the value of audit and a “need to understand better what people really wanted from audit”. 

Key priorities for 2014/15 were discussed which were taken from the document Draft plan and budget and levy proposals 2014/15 published by the FRC in December 2013. 

A review of the monitoring and enforcement activities of the FRC was also given.  It was noted that along with business as usual reviews by the Conduct Committee, there had been a “welcome response” to supervisory enquiries carried out and a “good response” to the first thematic reviews carried out into materiality and fraud.  The FRC recognise that due to the “significant increase in the scope of audit inspection activity” there will be “upward pressure on the 2014/15 budget” and a need for additional resource which would present a challenge. 

Attendants were then given the opportunity to put questions to the FRC.  A number of questions were raised on topics such as the FRC’s response to the International Accounting Standard Board’s (IASB’s) Discussion Paper: (DP/2013/1) ‘A Review of the Conceptual Framework for Financial Reporting’, how the FRC was going to address the quality of reporting by AIM companies and the FRC plan for improving bank audits. 

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