Maximizing Influence in EU, International Debates New Target of FRC
The Financial Reporting Council (FRC) has drawn up several goals and targets in its 2011/12 “Plan and Budget” to widen its influence in EU and international debates on corporate governance and financial reporting.
The FRC reaffirms that it will work on strengthening the “engagement between institutional investors and company boards.”
Part of its 2011/12 plan is to ensure greater value in corporate reporting and auditing delivered to investors and serve the public interest better.
Additionally, the FRC will work on “new powers and a new structure for the FRC that reflect the government’s agenda for growth” and seek the support of those who “rely on the quality of corporate governance and reporting in the UK.”
To achieve these goals, the FRC said it will support the “investors’ and other stakeholders’ assessments of the effectiveness of boards” in doing their duties.
The FRC further vowed to establish and improve the standards for financial reporting, and to settle the standards for auditing and actuarial practice. The needs of the SMEs will also be taken into account.
“We will contribute to these outcomes during the year by influencing and responding to EU and global initiatives relevant to our objectives in line with our principles-based approach.”
The FRC added that it will reform its “powers and structure with the support of the government” and through consultation with its stakeholders. It will “tightly” focus its limited resources on areas posing the greatest risk, it added.
The 2011/12 Plan and Budget was published after a consultation with many stakeholders who provided inputs.
“It contains a focused set of objectives aimed at increasing the value of corporate reporting and governance to investors,” said Stephen Haddrill, FRC Chief Executive.
Noting the issues raised during the consultation, Haddrill said the FRC needs “to maximize its influence in Brussels and internationally during a period of significant regulatory change.”
For the fiscal year 2011/12, FRC’s budget will be higher than the budget for 2010/11 because it estimates that the “accountancy disciplinary case costs will increase significantly, reflecting the stage that a number of major cases will have reached in 2011/12.”
Nonetheless, the FRC will reduce its core operating costs for accounting, auditing, and corporate governance by £0.7 million and for actuarial standards and regulation by £0.2 million compared with the budget for 2010/11.
It distinguishes between the costs on accounting, audit and corporate governance and on actuarial standards and regulation.
“Within the two categories we distinguish between the costs of our core activities, which are under our immediate control, and costs which are dependent on external factors, notably the number and complexity of the public interest cases which fall within the scope of our disciplinary arrangements,” the FRC said in the report.
“Crucially, we will keep our own costs under control with our core operating budget reducing by 5% for accounting, audit and corporate governance and by 8% for actuarial standards and regulation,” said Haddrill.