FRC Reforms Given Government Approval

FRC reforms given government approval Plans to reform and streamline the Financial Reporting Council and the powers it exercises have been given the all clear by the government.

The go ahead means the FRC can now implement its plans to condense its seven operating bodies into just two.

Business minister Norman Lamb said: ‘The FRC is already well-regarded both in the UK and internationally for the crucial role it plays in supporting high quality and transparent financial reporting. But by tightening its focus and streamlining its governance and structure, we believe the FRC can be even more effective.

‘Government and the FRC reflected on all responses to the consultation and held further discussions with industry and investors on the detail of the proposals. The FRC will continue this dialogue with stakeholders as the changes are implemented.’

The FRC can now morph its septet of operating bodies, namely the Audit Inspection Unit (AIU), Professional Oversight Board (POB), Financial Reporting Review Panel (FRRP), Accountancy Actuarial Disciplinary Board (AADB), Auditing Practices Board (APB), and Accounting Standard Board (ASB) and Board for Acturial Standards (BAS) into two new creations – the Codes and Standards Committee and the Conduct Division.

Vernon Soare, executive director for professional standards at ICAEW: ‘We are supportive of the overall ambition for the FRC. The challenge will be to demonstrate that the proposed new structure will enable it to continue to champion high quality financial reporting, auditing, corporate governance and standard setting in an increasingly international arena. This will be especially important at a time when there are substantive reforms being considered in Brussels and other markets around the world.’

Codes and Standards will pick up the areas covered by the APB, ASB and the Board for Actuarial Standards (BAS). It will also derive support from a trio of councils that will advise on audit & assurance, accounting and actuarial areas. with these councils chaired by former PwC senior partner Roger Marshall; former Ernst & Young chairman Nick Land; and former pension regulator and FSA employee Olivia Dickson.

BAS chairman Jim Sutcliffe will become chairman of the Codes and Standards.

Paul George, the FRC’s existing director of auditing, will head up the Conduct Division of the FRC – overseeing supervisory and disciplinary matters currently handled by the FRRP, POB, AIU and the AADB. Nick Land wil take over from Richard Fleck, the current chair of the APB, from 1 April 2012.