FRC publishes its 3-year Plan and Budget for 2022-25

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08 Apr 2022

The Financial Reporting Council (FRC) has published its 3-year plan and budget for 2022-2025

The 3-Year Plan sets out the FRC’s progress towards establishing the new Audit, Reporting and Governance Authority (ARGA). Respondents to the FRC’s consultation expressed continued support for the establishment of ARGA.  
 
In setting out the plan, the FRC have considered how, and when additional capacity will be required to adapt to new powers and responsibilities. The plan comprises a detailed breakdown of the FRC’s intended expenditure for 2022-23, alongside a summary of expected costs and headcount for the following two years.  Overall, the FRC expects its headcount to increase in 2022/23 from the current budgeted number of 417 at March 2022, to 486 at March 2023, with similar growth forecast in 2023/24 followed by smaller growth in 2024/25.

To support the FRC’s plan and act in the public interest the FRC’s core objectives are to:

  • Set high standards in corporate governance and stewardship, corporate reporting, auditing and actuarial work, and assess the effectiveness of the application of those standards, enforcing them proportionately where it is in the public interest.
  • Promote improvements and innovation in the areas for which we are responsible, exploring good practice with a wide range of stakeholders.
  • Influence international standards and share best practice through membership of a range of global and regional bodies and incorporate appropriate standards into the UK regulatory framework
  • Promote a more resilient audit market through greater competition and choice.
  • Transform the organisation into a new robust, independent, and high-performing regulator, acting in the public interest

More detailed strategic priorities for 2022/23 for each of the FRC's four divisions - Regulatory Standards, Supervision, Enforcement and Corporate Services - are as follows:  

Regulatory Standards and Codes

  • Development and maintenance of standards and codes, including the periodic review of FRS 102, adoption of ISA (UK) 500 and ISA (UK) 600, and post-implementation review and revision of technical actuarial standards.
  • Alignment of its Corporate Governance & Stewardship monitoring and evaluation programme.
  • International influencing of auditing and ethical standards, and significant contribution to non-financial reporting developments in the UK and internationally.
  • Preparation for ARGA’s local audit systems leader role.
  • Activities focused on improvements and innovation to support high quality reporting and audit quality.
  • Promoting the use of technology throughout its policy areas
  • Supporting its objectives and activities through increased stakeholder engagement with impact and influence, including an overhaul of planned publications focused on collective impact.

Supervision

  • Deliver a full programme of high-quality Audit Quality Review (AQR) inspections, Corporate Reporting Review (CRR) reviews and professional oversight visits and publish associated reporting, including thematic reviews.
  • Carry out ISQC inspection work and prepare for ISQM1.
  • Increase supervision of audit firm culture.
  • Assess audit firms’ adoption of operational separation principles.
  • Implement Public Interest Entity (PIE) audit registration decision-making.
  • Increase intensity of forward-looking supervision of audit firms, with more ‘joined up’ regulation of firms’ actions on quality.
  • Negotiate mutual recognition agreements resulting from EU Exit.
  • Perform equivalence and adequacy assessments.

Enforcement

  • Fair, robust, and timely case closures or conclusion through focus of investigations, prioritisation, training, and recruitment.
  • Upskilling and training to respond to changes in AEP from January 2022 and implement future powers arising from regulatory reform.
  • Publication of the Annual Enforcement Review, driving improved behaviours through messaging case outcomes.

Corporate services

  • Develop a statutory funding model for ARGA
  • Develop and implement an integrated information management strategy, including a medium-term IT strategy and enhanced data analytics and reporting.
  • Enhance cybersecurity risk management.
  • Appropriate workforce planning, aligned with the business planning cycle and designed to incentivise, reward, and retain key skills.
  • Strengthen support infrastructure, including in finance and procurement systems, internal controls, and IT.
  • Legal support for regulatory reform and legal and operational support for the UK Endorsement Board (UKEB).

The 3-year plan also covers other areas such as governance, risks and challenges and KPIs. The FRC also sets out its budget for 2022/23 for expenditure and funding.

The press release and 3-year Plan are available from the FRC website.

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