FRC publishes Strategy for 2016/19

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28 Oct, 2015

The Financial Reporting Council (FRC) has published its Strategy for 2016/19. It intends to shift the emphasis of its activities away from the introduction of new requirements and, instead, to focus on embedding the requirements that have been introduced over the past three years to ensure that the intended benefits are secured.

Over the 2013/16 period, the FRC has been focussed on addressing the lessons learned from the global financial crisis. Significant regulatory changes have been introduced across all areas for which the FRC is responsible, some by the FRC itself and others by the UK Government and European Union (EU).

The FRC believes that, those actions having been taken, there is a need for a change of emphasis and that its priority now should be to help companies embed these requirements. Their overall objectives over the next three years will be to promote:

In particular, over the next three years it plans to take the actions set out below.

Corporate governance and investor stewardship

In relation to governance and stewardship, the FRC plans to do the following:

  • Amend the UK Corporate Governance Code in 2016 to implement the changes required by the ARD. They will then aim to avoid introducing any further changes to the Code over the three year period.
  • Complete their project on corporate culture and behaviour.
  • Focus on promoting effective investor engagement, including monitoring of reporting by UK Stewardship Code signatories.
  • Implement those parts of the EU Shareholder Rights Directive for which they are responsible in a way that minimises the costs for those affected.

Corporate reporting

In relation to corporate reporting, they plan to undertake these actions:


In their work on auditing, the actions they have planned are as follows:

  • Implement the ARD in 2016, supported by a consultation later in 2015 or in early 2016.
  • Establish sound ethical and technical standards for auditors that meet the requirements of the ARD, on which they recently published a consultation.
  • Complete their work to implement the recent changes in extended audit committee and auditor reporting, including assessing the consequences of retendering and rotation.
  • Issue a revised Audit Firm Governance Code in 2016/17
  • Aim to improve audit quality so that, by the end of the period, ninety percent of FTSE 350 audits will require no more than limited improvements, as assessed by their Audit Quality Review (AQR) monitoring programme.
  • Re-scope their AQR activities to increase monitoring of smaller audit firms and commence inspections of local authority and health body audits, both required due to regulatory changes.

They will also consider the consequences of the implementation of the ARD on their oversight and disciplinary activities in relation to the accountancy profession, as well as how best to promote and support quality in public interest assurance activities more widely.

The press release and full Strategy report can be found on the FRC website.

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