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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. The chair and deputy chair are appointed by the Secretary of State for Business, Innovation and Skills. Other Board members are appointed by the Board. The Board is supported by three governance committees (Audit Committee, Nominations Committee and Remuneration Committee) and by two business committees (Codes & Standards Committee and Conduct Committee). The Codes & Standards Committee is supported by three Councils which advise on Corporate Reporting, Audit & Assurance and Actuarial matters. The CRR Committee, 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 and the disciplinary Tribunal Panel are maintained pursuant to the Conduct Committee Operating procedures and the FRC’s Disciplinary Schemes.  The full structure of the FRC is available on the FRC website here.  The committees are explained below. 

Codes and standards Committee

The Codes and Standards Committee, chaired by the Executive Director Codes and Standards, is responsible for all of the codes and standards set by the FRC. It considers proposed standards and guidance recommended to the FRC through its three councils, each of which is advised by a staff team:

  • The Corporate Reporting Council, supported by the Accounting and Reporting Policy Team, is responsible for the development of UK accounting standards as well as considering and commenting on international proposals. It also carries out proactive work on international standard setting, most commonly with EFRAG. The Accounting and Reporting Policy Team work with the FRC’s own Financial Reporting Lab to research emerging issues and good practice.
  • The Audit and Assurance Council, supported by the Audit and Assurance Team, is responsible for the development of International Standards on Auditing (UK and Ireland) and associated practice notes and bulletins, ethical standards for auditors and reporting accountants, statements of investment circular reporting standards and other UK assurance standards. It also provides input to the IAASB on the development of International Standards on Auditing and to the IESBA on the development of the Code of Ethics for Professional Accountants. It is also responsible for the FRC’s work on the Audit Quality Framework.
  • The Actuarial Council, supported by the Actuarial Policy Team, is responsible for the development of actuarial standards and guidance for the UK.

The Committee is directly responsible for corporate governance codes and guidance for companies and investors, assisted by a Corporate Governance Team. 

Conduct Committee

The Conduct Committee carries out a range of regulatory, inspection and enforcement activities in relation to accounting, auditing and actuarial work:

  • It oversees the Audit Quality Review Team, which inspects auditors of public interest entities.
  • It is responsible for the oversight of the regulation of accountants and actuaries, including monitoring of recognised supervisory bodies and recognised qualifying bodies (the UK’s professional accounting institutes and associations).
  • Assisted by its Monitoring Committee, it oversees the Corporate Reporting Review Team, which is the enforcement mechanism for accounting by UK companies. In certain cases, the team may convene a Financial Reporting Review Group drawn from the Financial Reporting Review Panel to consider the issue.
  • Assisted by its Case Management Committee, it oversees investigation and enforcement action in public interest cases. This includes cases against preparers of financial statements as well as accountants and actuaries in business and practice.

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.