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 and Risk Committee and People Committee), and by three business committees (Regulatory Standards and Codes Committee, Supervision Committee and Conduct Committee). The three business committees are also supported by non-voting 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 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.
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’) shall be responsible for approving and overseeing on behalf of the Board high quality, effective and proportionate Standards, Guidance, SORPs, Practice Notes and Codes for corporate governance, stewardship, audit and assurance, actuarial, and corporate reporting 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 Committee will also provide strategic input and constructive challenge to the FRC’s supervision and monitoring activities, identifying key areas of risk and monitoring the progress of operating plans.
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. The Supervision Committee and the FRC Board exercise these functions in accordance with its Operating Procedures (PDF) (link to FRC website).
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'.
