UK regulator plans enhanced audit and reporting oversight

The UK Financial Reporting Council (FRC) plans to enhance oversight over audits and step up its reviews of corporate reporting as it moves forward to its transition to a new regulatory organisation.

In its plan and budget for 2019–2020, released Thursday, the FRC stated its intentions to use expanded resources to strengthen enforcement in its regulation of auditing and corporate reporting.

“The FRC’s plan sets out a clear pathway towards the establishment of an enhanced authority, with stronger powers and greater resources, as quickly and effectively as possible,” Stephen Haddrill, the chief executive officer of the FRC, said in a news release.

Sir John Kingman last year completed an independent review of the FRC, addressing gaps in the regulator’s powers and setting a course for a stronger new regulator to emerge from the FRC. The UK government backed Kingman’s report, and the transition to a new regulator to be called the Audit, Reporting and Governance Authority (ARGA) is underway.

The priorities for 2019–2020 announced Thursday by the FRC include:

• Supporting the transition to the ARGA.
• Driving a step-change in audit quality in the UK, using the FRC’s supervisory and standard-setting powers.
• Increasing the planned number of corporate reporting reviews while working to address the independent review’s recommendations that reviews should cover the whole of a company’s annual report.
• Using its expanded enforcement resources to manage an increasing caseload and accelerate decisions.
• Promoting high-quality corporate governance and investor stewardship, including through a new Stewardship Code.

“Ahead of full implementation of the Kingman proposals, the FRC will do all in its power to promote transparency and integrity in business, and improve audit quality, corporate governance, and investor stewardship,” Haddrill said.

— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is FM magazine’s editorial director.