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, including the CEO and Chairman, are appointed by the Secretary of State for Business and Trade.
The Board is supported by two governance committees (Audit and Risk Committee and People Committee), and by three regulatory committees (Regulatory Standards and Codes Committee, Supervision Committee and Conduct Committee). The three regulatory committees are also supported by Senior Advisors who attend Committee meetings and the Advisory Panel who can be asked to provide input on technical matters on project to project basis. The Executive Committee manages the day to day operations of the FRC, including resources, policies and programmes.
The Tribunal Panel and the Enforcement Committee Panel are maintained pursuant to the Conduct Committee Operating procedures and the FRC’s disciplinary and enforcement procedures.
The full structure of the FRC is available on the FRC website here.
The Government also writes to the FRC setting out its priorities for the FRC's work. In November 2023, the Secretary of State for Business and Trade issued the FRC with a new remit letter updating the Government’s priorities for the FRC’s work.
Audit and Risk Committee
The purpose of the FRC's Audit and Risk 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 and use of public funds, corporate governance, 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.
The Audit and Risk committee should provide the Board with advice on the continued appropriateness of the risk strategy and risk appetite in light of the organisation’s purpose, values, corporate strategy and strategic objectives.
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.
Regulatory Standards and Codes Committee
The Regulatory Standards and Codes Committee (the ‘Committee’) remit entails high quality, effective and proportionate standards, codes and guidance for corporate governance, corporate reporting, stewardship, audit and assurance, and actuarial work.
The Committee comprises of the Chair of the Committee and other non-executive Directors of the FRC. In addition, the Committee will be assisted by Senior Advisors, who will provide technical expertise and advice where requested, but will not be involved in taking decisions.
Conduct Committee
The Conduct Committee (the ‘Committee’) is responsible for the oversight of the FRC’s enquiries, investigations and enforcement function, ensuring that appropriate cases are investigated and conducted fairly, in the public interest, in a timely manner and in accordance with due process and the Regulators code.
The Conduct Committee comprises FRC Board members and others with a range of skills, experience and relevant technical expertise. Membership of the Committee excludes current practising auditors as well as employees or officers of the professional bodies regulated by the FRC.
Supervision Committee
The Supervision Committee is responsible for overseeing the FRC's delegated statutory supervisory and oversight functions and its non-statutory monitoring work, with the aim of serving the public interest by promoting high professional standards in accounting, audit, actuarial work and corporate reporting.
The Committee provides strategic input and constructive challenge to the FRC’s supervision and monitoring activities, identifying key areas of risk and monitoring progress against the Supervision Division's objectives and operational plans.
The Committee advises the FRC Board on the exercise of statutory functions delegated to it 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.
Executive Committee
The Executive Committee manages the day to day operations of the FRC, including resources, policies and programmes.
Review of the FRC
In July 2022 the FRC published a Position Paper setting out the next steps it will be taking in its transformation into the Audit, Reporting and Governance Authority (ARGA) following the government’s response to its White Paper "Restoring trust in audit and corporate governance". Following the withdrawal of proposed secondary legislation laid in July covering the Audit & Assurance Policy, the Resilience Statement, the Material Fraud Statement and enhanced reporting on distributions, the government has stated that it remains committed to wider audit and corporate governance reform, including establishing a new ARGA. In July 2024 in His Majesty the King’s speech to Parliament setting out the Government’s agenda for its first session, the Draft Audit Reform and Corporate Governance Bill was announced to replace the FRC with the ARGA and to give it a range of new statutory responsibilities and powers. The Government indicates that this will include powers to uphold standards and independent scrutiny of companies’ accounts, as well as powers to investigate and sanction company directors.
More information
More detail can be found on the FRC website.
