FRC draft plan and budget highlights key areas of focus for 2017/2018

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15 Dec, 2016

The Financial Reporting Council (FRC) has published its Draft Plan and Budget and Levy Proposals for 2017/18 which indicates those priorities that it will focus on in 2017/18.

The FRC will continue to “drive high standards of corporate governance and reporting in the UK, and help maintain the UK’s standing as a global centre of excellence for accountancy, audit and actuarial work”.  The work plan includes a set of indicators, alongside each priority, that will assist the FRC in assessing the state of key aspects of corporate governance and reporting in the UK.

In 2017/18 the FRC’s priorities are: 

  • Promoting high quality corporate governance and effective investor stewardship. Key activities include:
    • Responding to the government’s consultation on Corporate Governance Reform, including action to update the Code and supporting guidance.
    • Following its Corporate Culture report by monitoring and reporting on culture by companies and investors.
    • Updating its Guidance on Board Effectiveness to incorporate its observations about corporate culture and the role of boards.
    • Scrutinising and reporting on the quality of reporting against the Stewardship Code and delisting signatories that fall within tier 3.
  • Enhancing the speed and effectiveness of its enforcement role
    • The FRC will seek to expand its team and review its procedures to ensure that reviews can be completed as quickly as possible with sufficient resources.
  • Promote high quality corporate reporting. Key activities include:
    • Continuing to work to influence the development of International Financial Reporting Standards (IFRSs).
    • Producing a second annual assessment of the state of corporate reporting in the UK, following its first report in October 2016.
    • Focusing corporate reporting reviews for the following priority sectors:
      • Property
      • Travel and leisure.
      • Support services.
    • Conducting thematic studies of:
      • Disclosure of judgements and estimates.
      • Pension Disclosures.
      • Alternative performance measures.
    • Monitor disclosure relating to:
      • New accounting standard disclosures
      • Principal Risks and Uncertainties – specifically the effect of the decision to leave the EU and the low interest rate environment on risk disclosures.
      • Updating its Guidance on the Strategic Report.
  • Promoting justifiable confidence in auditing. Key activities include:
    • Fulfilling its responsibilities as the Competent Authority for audit in the UK
    • Publishing a second report on developments in Audit, following its first report in July 2016. Areas of focus include changes in auditor appointment, audit of pension balances and disclosures and impact of currency fluctuations.
    • Conducting thematic reviews of:
      • Auditor’s responsibilities for areas of the annual report beyond the financial statements;
      • Audit firm culture and governance; and
      • Materiality
    • Influencing the work of the International Auditing and Assurance Standards Board (IAASB) and other standard-setting bodies
  • Promoting high quality actuarial work
  • Ensuring that it is effective and efficient, and has a corporate culture that supports its mission and regulatory role. 

The FRC also sets out its proposed budget for 2017/18 for expenditure and funding.  Overall the funding requirement is expected to increase by 4% from £34.6m to £36.0m.  This is principally through an increase of 2.5% in the levies on the professional bodies and a 5% increase in the preparers levy. 

Comments are requested until 17 February 2017. 

The press release and Draft Plan and Budget and Levy Proposals 2017/8 are available on the FRC website.

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