Government Plans Major FRC Overhaul
The government has published plans for a radical overhaul of the Financial Reporting Council.
The aim of the reforms is to streamline the Council, currently made up of seven separate bodies, making it more efficient and focused on the job of standard-setting and policing reporting and auditing within the capital markets.
The proposals will see the FRC reduced to just two board committees, one focused on codes and standards and the other on conduct.
‘At present the Financial Reporting Council consists of seven bodies to do just one core job, which is to promote good reporting and governance to foster investment. A streamlined, unified FRC will help us to regulate less and carry out our role more effectively. We are consulting on reforms we believe are urgently needed to secure our independence of those we regulate, reduce the risk of overlapping, over-regulation, and help us to promote the interests of the UK in the international regulatory arena,’ said FRC chairman, Baroness Hogg.
Comments are invited on plans for the FRC to concentrate on areas of greatest concern to the operation of the capital markets, including:
setting standards of governance, accounting, audit and actuarial work in the interests of investors in the corporate sector, and focus monitoring and enforcement activity primarily on publicly-traded and the largest private companies;
narrowing the FRC’s accountancy disciplinary arrangements to cover the quality of work and conduct of accountants in preparing and auditing reports for the capital markets, leaving other cases of potential misconduct to be dealt with by the relevant professional body.
The consultation also proposes giving the Council the power to require a Recognised Supervisory Body to impose sanctions on an audit firm and/or individual auditor in respect of poor quality work and allowing it to make its own rules for disciplinary arrangements in relation to accountants, without needing to obtain the agreement of the professional bodies.
Responses to the consultation are invited by 10 January 2012. The intention is to implement the changes, guided by the responses to the consultation, in April 2012.