REFORM OF THE FRC GATHERS PACE

Speaking at a New City Agenda event held in the Houses of Parliament on 16 May 2019, Sir John Kingman, the author of the independent review of the Financial Reporting Council (FRC) set out the broad range of 83 recommendations contained within the report and his expectation of future reform to implement the review.

Stressing that the job of any new regulator should not be to prevent corporate failure, Sir John noted that the Secretary of State for Business, Energy and Industrial Strategy The Rt Hon Greg Clark MP had welcomed the report and given broad support to the recommendations made. 

Sir John noted that the review process had seen evidence of a consensual culture at the FRC and that the regulator was culturally sympathetic to the world view of the accountancy profession. The report sets out ways that the new regulator could work to avoid the perception of regulatory capture and recommendations have been made to encourage transparency and independence of regulation. 

The outcome of the report will be closely linked to Sir Donald Brydon's independent review of the quality and effectiveness of audit and that of the Competition and Markets Authority, which has published an update paper outlining serious competition concerns and proposing changes to legislation to improve the audit sector for the benefit of savers and investors. 

AIA Director of Operations David Potts said "It's important to ensure that the government gets the framework surrounding the creation of the new audit regulator correct and that means continuing to engage with regulated professional bodies, users of accounts, regulated firms and business stakeholders. Since the independent review of the Financial Reporting Council was announced AIA has provided evidence and worked with the review; we will engage and work on behalf of our members as the process continues." 

AIA will shortly be submitting its response to the government’s consultation on the recommendations, which give an opportunity to reform the sector’s regulation and improve transparency and independence. 

You can read and respond to the consultation, which closes 11 June 2019, seeking views on the recommendations made by the Independent Review of the Financial Reporting Council to create a new regulator responsible for audit, corporate reporting and corporate governance HERE.