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FRC publishes revised operating procedures for corporate reporting reviews

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07 Oct 2014

The Financial Reporting Council (FRC) has today published revised operating procedures for the Conduct Committee when it is performing corporate reporting reviews. The revised operating procedures follow a consultation published in April 2014 and are effective immediately.

Under the Companies Act 2006 ("the Act"), the Conduct Committee of the FRC reviews the reports and accounts of public and large private companies to determine whether they comply with the Act and other reporting requirements. Where it appears that those requirements have not been complied with, the Conduct Committee investigates the position and determines the action to be taken, in accordance with their operating procedures, to address any non-compliance.  

The key areas that have been revised include:

  • Formally reflecting the concept of a ‘Committee Reference’.  Currently, where a Conduct Committee enquiry gives rise to a significant correction or improvement which it considers investors and preparers ought to be aware of but where there is less cause to inform the market at large, it may ask the company to refer to interaction with the Conduct Committee in the annual report and accounts where a change as a result of the investigation is made.  The operating procedures now explicitly refer to Committee References and include an explanation when a committee reference may be requested or a press notice issued by the FRC’s Conduct Committee in respect of an individual case.  The operating procedures also now indicate that the Conduct Committee will expect to be given the opportunity to comment on the disclosure that the company makes.
  • An amendment to the operating procedures to allow the names of those companies that have published Committee References and a brief description of the issue to be included within the Corporate Reporting Review Annual Report.
  • An explanation within the operating procedures that the Conduct Committee’s letter to a company may include references to aspects of reporting other than compliance with mandatory requirements, to encourage improvements to the quality of its future reporting.
  • Amending the operating procedures to clarify how the Conduct Committee manages complaints, including how anonymous complaints are handled and providing a link to the FRC’s reference and advice to whistle-blowers. 

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