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FRC issues Plan and Budget for 2014/2015

  • FRC Image

22 Apr 2014

The Financial Reporting Council (FRC) has today published its Plan and Budget for 2014/2015. The plan sets out the activities that the FRC will focus on over the next year to pursue the six key priorities identified in 2013 as part of its three year plan for 2013 to 2016.

The FRC has identified the following activities as areas of focus in 2014/15:  

Governance and Stewardship

The FRC will continue to promote a longer term approach to corporate governance and investor stewardship, by:

  • updating the provisions of the UK Corporate Governance Code in relation to risk management, going concern and remuneration;
  • encouraging fuller explanations as part of the 'comply or explain' framework;
  • engaging with investors to better understand their information needs; and
  • encouraging investors to give more disclosures around stewardship. 

Corporate Reporting

The FRC will address the needs of investors from corporate reporting, by;

  • supporting companies in complying with new requirements such as the statement that an annual report is 'fair, balanced and understandable', for example through the work of the Financial Reporting Lab;
  • promoting more useful auditor reporting;
  • influencing EU and international  reporting developments, including IASB and IAASB initiatives such as the IASB's Conceptual Framework and Disclosure Framework projects; and
  • evaluating how it can assist smaller listed and AIM companies to improve confidence in their financial statements by improving the quality of their reporting. 

Audit Quality

The FRC will work to promote audit quality by:

  • undertaking its annual programme of approximately 125 audit inspections and imposing sanctions when poor quality audits are identified; and
  • undertaking a thematic review of the auditing of banks and building societies. The need for improvements in the quality of auditing of financial institutions was highlighted as a key concern in the 2013 Audit Quality Inspection Report and the FRC recently commented that “the pace of improvements in the quality of auditing of banks and building societies has not been sufficient”.

Investigative, monitoring and disciplinary procedures

The FRC will address the consequences of major legislative change and other proposals affecting audit and audit monitoring, which will add very significantly to its workload.  Its goal is to secure that this additional work delivers a notable improvement in audit quality.

These legislative changes include the Competition Commission recommendations, the EU audit Directive and Regulation and a new requirement for the FRC to review local government audits.

As well as the areas listed above, the FRC will also continue its work to promote the quality of actuarial work.

The full details of the plan and budget and press release can be obtained from the FRC website.  Our previous story on the draft plan and budget sets out further information on the background behind these areas of focus.

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