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FRC publishes its draft plan and budget for 2020/21

  • FRC Image

12 Feb 2020

The Financial Reporting Council (FRC) has published its draft plan and budget for 2020/21. Comments are requested by 28 February 2020.

The strategy has been developed in light of the recommendations made to the government by three independent reviews of the FRC. The FRC indicates that the 2020/2021 strategy sets out its initial response to those recommendations and that the strategy will be replaced in 2021 with a longer-term strategy once the government’s final positions to the recommendations made to it are finalised.

The FRC indicates that moving forward it will reorganise into four divisions consisting of:

  • Regulatory Standards and Codes;
  • Supervision;
  • Enforcement; and
  • Corporate services.

The draft plan and budget sets out the FRC’s strategic priorities in these four areas:

Regulatory Standards and Codes

  • Promote the Stewardship Code, support signatories to the Code and ensure significant take up. Assess early reporting of implementation.
  • Undertake an annual assessment of adherence with the Corporate Governance Code as well as the Wates Code for private companies.
  • Update the Corporate Governance Code and/or related guidance for enhanced requirements on internal controls, risk management, going concern and resilience/viability.
  • Publish a thought leadership paper on the Future of Corporate Reporting.
  • Deliver FRC Lab projects on Technology and Future Horizons in reporting.
  • Update UK GAAP for recent international developments.
  • Launch a post-implementation review of the Technical Actuarial Standards.
  • Support the government’s green finance strategy to embed climate-related issues into corporate reporting and investment decision making.
  • Assist the Government with creating new structures for setting accounting standards after leaving the EU.

Supervision

  • Taking a risk-based approach, increase the scope and number of Audit Quality Reviews (from 130 in 2019/20 to between 145-165 in 2020/21) and Corporate Reporting Reviews (from 215 in 2019/20 to between 240 and 260 in 2020/21) undertaken.
  • Improve transparency by publishing more information about these individual reviews as well as thematic reviews on key cross-market issues e.g. climate reporting.
  • Build and deepen its supervision of the major audit firms, including governance, structure, audit quality management, culture and resilience.
  • Expand oversight of the professional bodies with decision-making about auditor registration moving to the FRC.

Enforcement

  • Deliver robust, fair and transparent regulatory outcomes.
  • Continue to improve the timeliness of its work.
  • Report on regulatory outcomes and progress through the Annual Enforcement Review and public messaging.
  • Conclude its Carillion related factual investigations and decide upon any enforcement action required.

Corporate services

  • Deliver within budget.
  • Improve management information and publish externally on an agreed regular basis.
  • Improve staff morale and wellbeing.
  • Deliver an integrated communications and stakeholder management strategy to ensure it gets the insights it needs to develop policies, maximise the impact of its work and regularly and clearly communicate with its stakeholders.
  • Assess organisational capability gaps and close them.
  • Monitor risks to achieving its objectives and put controls in place to mitigate where possible.

The draft plan and budget also covers the actions the FRC will take in relation to its reform, changes to its governance and also resourcing.

The FRC also sets out its proposed budget for 2020/21for expenditure and funding. Expenditure is being increased in the areas of audit regulation, monitoring the quality of corporate reporting and enforcement.

The press release and Draft Plan and Budget 2020/21 are available from the FRC website.

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