FRC publishes annual report 2014/15

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28 Jul, 2015

The Financial Reporting Council (FRC) has today published its 2014/15 annual report (“the annual report”). The annual report reviews the activity of the FRC over the last year, highlights the achievements of the FRC in 2014/15 and also identifies areas that it will focus on in 2015/16.

The annual report provides an assessment of the progress that the FRC has made against its three year strategy, set in 2013.  The strategy, focusing on five areas, seeks to promote:

  • High quality corporate governance and investor stewardship which foster trust in the way companies are run.
  • High quality corporate reporting that is fair, balanced and understandable.
  • High quality audit and confidence in the value of audit.
  • Actuarial oversight and standards which underpin high quality actuarial practice, and integrity, competence and transparency of the actuarial profession.
  • Effective, proportionate and independent investigative, monitoring and disciplinary procedures.

The annual report indicates that it believes that it has made “significant progress” against each of these strategic priorities.  Some of the key areas of activity for the FRC in 2014/15 included:

  • Amending the UK Corporate Governance Code to promote a better focus on risk, internal control and the assessment and reporting of the longer-term viability of companies.
  • Issuing a report in March 2015 on the take-up of the requirements on extended auditor reporting.
  • Review of the implementation and operation of the Audit Firm Governance Code in May 2015.

In 2015/16 the FRC will complete the delivery of its three year strategy set in 2013 by “by building on or embedding actions taken in the previous two years”.  Key priorities for the FRC include (many of which are included in its plan and budget for 2015/16):

  • Continuing the programme of work to promote audit that is of a consistently high standard and which meets investor’s needs.
  • Taking forward work on corporate governance and stewardship, in particular measures to enhance levels of engagement between investors and companies.
  • Promoting clear & concise reporting, including through the project to help smaller listed and AIM companies with the quality of their reporting.
  • A major new project to focus on company culture and succession planning and how to promote good practice in both areas.

A “significant” part of the FRC’s work in the coming year will also be to support the Department for Business, Innovation and Skills (BIS) in the UK implementation of the EU Audit Directive and Regulation.  As a result of Competition and Markets Authority final Order implementing reforms of the audit market in the UK, the FRC has indicated that in 2015/16 it will take on a number of additional responsibilities.

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