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Financial Reporting Council

Overview

The Financial Reporting Council (FRC) is the UK’s regulator for the accounting, audit and actuarial professions and is also responsible for corporate governance in the UK.

The FRC Board is responsible for the overall governance and strategy of the FRC and ultimately approves all codes and standards issued by the FRC. All Board members are appointed by the Secretary of State for Business, Energy and Industrial Strategy (BEIS).

The Board is supported by two governance committees (Audit Committee  and People Committee), by two business committees (Codes and Standards Committee and Conduct Committee). The Codes & Standards Committee is supported by three Advisory Councils, which advise on Corporate Reporting, Audit & Assurance and Actuarial matters.

The Corporate Reporting Review (CRR) Committee, Audit Quality Review (AQR) Committee and the Case Management Committee support the Conduct Committee and have specific responsibilities as set out in the FRC’s monitoring, review and disciplinary procedures.  The Financial Reporting Review Panel, Disciplinary Tribunal Panel and Enforcement Committee are maintained pursuant to the Conduct Committee Operating procedures, the FRC’s Disciplinary Schemes and the Audit Enforcement Procedure.  The full structure of the FRC is available on the FRC website here.  

Audit Committee

The purpose of the FRC's Audit Committee is to support and advise the Accounting Officer (The Chief Executive) and the Board by providing oversight of the company’s financial reporting process, the audit process, the system of internal controls including business continuity and information technology, the identification and management of significant risks and its compliance with laws and regulations.
The Committee provides assurance to the Board and, when it is not satisfied with any aspect of the FRC’s internal controls or reporting, it shall report its views to the Board and the Accounting Officer.

People Committee

The purpose of the People Committee is to provide the FRC Executive with challenge, constructive dialogue and strategic direction on issues relating to the appointment and recruitment, remuneration, talent management and welfare of FRC staff and non-executive members and to take high-level decisions on such issues as necessary.

Codes and standards Committee

The Codes and Standards Committee is responsible for advising the FRC Board on corporate governance matters, including changes to the UK Corporate Governance Code and the Stewardship Code.

It advises the FRC Board on the Annual Plan and Budget and FRC strategy - particularly on issues of corporate governance and stewardship. It pays special attention to identifying emerging and potential risks to the quality of corporate governance and stewardship in the UK. It also approves the issue and maintenance of FRC taxonomies, including for consultation. It is responsible for making appointments to the Councils (see below).

The Committee comprises FRC Board members together with others with particular technical expertise, including practicing professionals.

Conduct Committee 

The Conduct Committee is responsible for overseeing the FRC’s work in promoting high quality corporate reporting. Its responsibilities include overseeing:

  • Monitoring of Recognised Supervisory and Recognised Qualifying Bodies
  • Audit Quality Reviews
  • Corporate reporting reviews
  • Professional discipline
  • Oversight of the regulation of accountants and actuaries

It also has statutory functions which are delegated by the Secretary of State under section 457 of the Companies Act 2006 and section 14(2) of the Companies (Audit, Investigations and Community Enterprise) Act 2004. The Conduct Committee exercises these functions in accordance with its Operating Procedures (PDF) (link to FRC website).

The Conduct Committee, which meets monthly, comprises FRC Board members and others with a range of skills, experience and relevant technical expertise. It has a lay majority of lay members and excludes current practicing auditors as well as officers of the professional bodies it regulates.

The Conduct Committee is supported by three further Committees: the Case Management Committee whose functions include monitoring and providing oversight in respect of enforcement investigations and tribunal proceedings, the Audit Quality Review Committee and the Corporate Reporting Review Committee which ensure the consistency and quality of the FRC's monitoring work. Members of these Committees, including the Chairs, sit on the Conduct Committee.  Further information on the Corporate Reporting Review Committee is available here .

Corporate Reporting Council

The Corporate Reporting Council is advisory to the FRC Executive on the development and maintenance of high quality, effective and proportionate Standards, Guidance, SORPS and Practice Notes for accounting and narrative reporting work. In so doing the Council:

  • Provides perspective on the broader landscape affecting the quality of accounting and narrative reporting;
  • Advises on the identification of current, emerging and potential risks to the quality of accounting and narrative reporting and to the FRC’s responsibilities and strategic objectives in connection with accounting and narrative reporting matters;
  • Identifies opportunities to promote the quality of accounting and narrative reporting through Standards, Guidance and Statements of Recommended Practice for accounting and narrative reporting; and
  • Provides advice on accounting and narrative reporting matters.

The Council comprise the Chair and up to 14 other members, up to half of the membership shall be practicing members of the accounting profession. 

Audit and Assurance Council

The Audit and Assurance Council is advisory to the FRC Executive on the development and maintenance of high quality, effective and proportionate Standards, Guidance, SORPS and Practice Notes for audit and assurance work. In so doing the Council:

  • Provides perspective on the broader landscape affecting the quality of audit and assurance work;
  • Advises on the identification of current, emerging and potential risks to the quality of audit and assurance work and to the FRC’s responsibilities and strategic objectives in connection with audit and assurance matters;
  • Identifies opportunities to promote the quality of audit and assurance work through Standards, Guidance, Practice Notes and Statements of Recommended Practice for audit and assurance work; and
  • Provides advice on audit and assurance matters.

The Council comprises the Chair, who is a non-executive Director of the FRC Board, and up to 14 members. Up to half of the membership shall be practicing members of the audit profession.

Actuarial Council

The Actuarial Council, supported by the Actuarial Policy Team, is responsible for the development of actuarial standards and guidance for the UK. 

Review of the FRC

In March 2019, The Department for Business, Energy and Industrial Strategy (BEIS) issued a consultation to seek views on the recommendations made by the Independent Review of the Financial Reporting Council (FRC) to create a new regulator responsible for audit, corporate reporting and corporate governance.  The review, undertaken by Sir John Kingman, recommends that the FRC be replaced with an independent statutory regulator called the Audit, Reporting and Governance Authority (ARGA).

More information

More detail can be found on the FRC website and within the FRC publication 'The FRC and its Regulatory Approach'.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.