Original recommendation

The Kingman Review recommended that the FRC should be replaced as soon as possible with a new independent regulator with clear statutory powers and objectives. (Source: Kingman 1)

Proposal

The Government proposes (Section 10) to establish the ARGA by bringing forward the necessary legislation when Parliamentary time allows and welcomes the work that has already been taken forward under new leadership at FRC where legislation is not required. ARGA will have clearly defined roles and powers and will be empowered to exercise its expert judgement to further its objectives.

The Government intends to legislate to give ARGA the following general objective which will apply when it is carrying out its policy-making functions: "to protect and promote the interests of investors, other users of corporate reporting and the wider public interest."

Government response

The Government’s package of reforms will give ARGA a range of statutory responsibilities and powers that the FRC does not have. These include formalised responsibility for overseeing the accounting and actuarial professions, a stronger role in auditor registration, and new powers to tackle breaches of company directors’ duties relating to corporate reporting and audit. Ministers will have flexibility as to when specific powers and reforms come into force, and will ensure that ARGA has the time and resources to establish the necessary capability.

The regulator will have statutory powers to oversee the professional bodies’ regulation of the accountancy profession and to investigate and sanction accountants in public interest cases relating to corporate reporting.