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FRC publishes its Strategy, Plan and Budget for 2021/22

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12 Apr 2021

The Financial Reporting Council (FRC) has published its Strategy, Plan and Budget for 2021/22.

The publication follows a period of consultation and includes a separate Feedback Statement in response to the main feedback comments that were received.

The Strategy, Plan & Budget 2021/22 reflects the FRC’s continuing commitment to serving the public interest whilst also modernising and moving towards becoming the Audit, Reporting and Governance Authority (ARGA).  In 2021/22 the FRC expects its overall costs to increase by £6.1m, almost half of which funds the organisation’s development and maturity; the other half funds the establishment of the UK Endorsement Board (UKEB) following the UK’s exit from the EU.

The FRC’s key areas of focus include:

Regulatory Standards

  • Developing and maintaining UK and Ireland accounting standards (GAAP) in a timely fashion.
  • Ensuring the UK endorsement process for IFRS provides accountability and transparency by establishing due process oversight.
  • Issuing a feedback statement and next steps following the FRC’s report on the Future of Corporate Reporting.
  • Developing and maintaining UK auditing standards.
  • Undertaking assessments of performance against the UK Corporate Governance Code, the UK Stewardship Code and the Wates Corporate Governance Code for Large Private Companies.
  • Consulting on revisions to the UK Corporate Governance Code and associated guidance ahead of legislation, subject to the outcome of Government consultation.
  • Delivering FRC Lab reports on stakeholder reporting and s172 of the Companies Act 2006, risk, uncertainties and scenarios, and performance metrics.
  • Supporting the FRC’s transformation into ARGA through establishing a programme of work aimed at reviewing and revising standards, codes and guidance, where appropriate, in advance of legislation.

Supervision

  • Taking a risk-based approach, maintaining the scope and number of Audit Quality Reviews and Corporate Reporting Reviews undertaken.
  • Using thematic and cross-market reviews to promote improvements in corporate reporting, audit quality and audit market resilience.
  • Building and deepening its forward-looking supervision of the major audit firms.
  • Further developing and sharing views on what constitutes high quality audit, including in response to changing circumstances, such as the impact of COVID-19.

Enforcement

  • Delivering robust, fair and transparent regulatory outcomes whilst continuing to monitor the impact of COVID-19, ensuring a proportionate and risk-based response in the public interest.
  • Delivering investigations and enforcement action in a timely manner.
  • Promoting improvements through communicating clear and impactful messages in its enforcement outcomes.
  • Supporting the transformation into the ARGA by working collaboratively with internal and external stakeholders.

The plan and budget also sets out key areas of focus for the FRC’s Corporate services division including embedding new governance arrangements and setting its medium-term IT and information strategy.

The Strategy, Plan & Budget 2021/22 also covers operational structure, governance and resourcing. The FRC also sets out its budget for 2021/22 for expenditure and funding. Expenditure is being increased in a number of areas including audit firm supervision, audit market supervision, corporate reporting review, actuarial standards and stakeholder engagement.

The press release, Strategy and Plan & Budget 2021/22 and a Feedback Statement in response to the consultation are available from the FRC website.

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