FRC
Operating Bodies:

 

Accountancy Investigation and Discipline Board (AIDB)

 

Accounting Standards Board (ASB)

 

Auditing Practices Board (APB)

 

Financial Reporting Review Panel (FRRP)

 

Professional Oversight Board (POB)

 

The Board for Actuarial Standards (BAS)

 

Financial Reporting Council

 

Purpose: The Financial Reporting Council (FRC) is a unified, independent regulator which aims to promote confidence in corporate reporting and governance.

 

In pursuit of this aim its six objectives are to promote:

  • high quality corporate reporting
  • high quality auditing
  • high quality actuarial practice
  • high standards of corporate governance
  • the integrity, competence and transparency of the accountancy and actuarial professions
  • its effectiveness as a unified independent regulator

Founded: Initially, the FRC was established in 1990 to promote good financial reporting through its two subsidiaries, the Accounting Standards Board (ASB) and the Financial Reporting Review Panel (FRRP). However, the US accounting scandals led the UK government to review regulation in this area giving the FRC an expanded and more active role.

 

Based: 5th Floor, Aldwych House, 71-91 Aldwych, London

 

Structure: There is a council made up of the chairman, deputy chair, the directors, the chairman of the subsidiary boards (ex-officio), 18 members. four observers, the secretary and chief executive as a non-voting representative. There is also a managing board and six operating bodies.

 

Chairman: Sir Christopher Hogg

Deputy Chair: The Hon Barbara Thomas Judge

Chief Executive: Paul Boyle

Secretary: Anne McArthur

Contact for corporate governance issues: Chris Hodge

 

Activities:

  • promoting high standards of corporate governance
  • setting, monitoring and enforcing accounting and auditing standards
  • setting actuarial standards 
  • statutory oversight and regulation of auditors
  • operating an independent investigation and discipline scheme for public interest cases
  • overseeing the regulatory activities of the professional accountancy and actuarial bodies

Committee on Corporate Governance: This was set up in March 2004. The committee's terms of reference are:

  • To keep under review developments in corporate governance generally, reflecting the FRC's objective of fostering high standards of corporate governance; to undertake reviews, either directly or by overseeing the work of others, and then to consider whether any actions by the FRC would be desirable; and to put proposals to the Council where appropriate.
  • To monitor the operation of the Combined Code on Corporate Governance and its implementation by listed companies and by shareholders.
  • Where significant doubts are raised about the appropriate interpretation of part of the Code, to consider the case for issuing a clarification, and if appropriate to do so, after any suitable consultation.

Functions of the operating bodies:

 

Accountancy Investigation and Discipline Board (AIDB)

 

Chairman: Mike Fogden CB
Executive Counsel: Cameron Scott

 

Aims to support the wider FRC goals by:

  • Safeguarding the public interest by maintaining and enhancing the standards of conduct of members and member firms of the accountancy profession, as represented by the participating members of the Consultative Committee of Accountancy Bodies (the Participants);
  • Providing a demonstrably fair, independent and expert system for investigating and, where appropriate, hearing significant public interest disciplinary cases;
  • Proceeding expeditiously with a view to sanctions being imposed on those found guilty of misconduct, including removal of their eligibility to audit;
  • Seeking to deter future acts of misconduct through its work.

It will meet its aims by:

  • Operating an independent investigation and discipline Scheme
    • for the investigation of cases, involving members and/or member firms of the Participants, which raise or appear to raise serious issues affecting the public interest in the United Kingdom;
    • for bringing appropriate disciplinary proceedings against those whose conduct appears to fall short of the standard reasonably to be expected of a member or member firm and, where appropriate, to impose penalties.
  • Keeping under review the working of the Scheme and the supporting Regulations to ensure that they are operating effectively.
  • Regular, high profile publicity for the Board's activities and achievements

 
Accounting Standards Board (ASB)

 

Chairman: Ian Mackintosh

Technical Director & Secretary: David Loweth

 

The  ASB aims to support the wider work of the FRC by establishing and improving standards of financial accounting and reporting, for the benefit of users, preparers, and auditors of financial information.

 

The Board intends to achieve its aims by:

  • Developing principles to guide it in establishing standards and to provide a framework within which others can exercise judgement in resolving accounting issues.
  • Issuing new accounting standards, or amending existing ones, in response to evolving business practices, new economic developments and deficiencies being identified in current practice.
  • Addressing urgent issues promptly.
  • Working with the International Accounting Standards Board (IASB), with national standards-setters and relevant European Union (EU) institutions to encourage high quality in the IASB's standards and their adoption in the EU.
Auditing Practices Board (APB)

 

Chairman: Richard Fleck

 

Sets high quality standards and guidance:

  • for the performance of external audit and other activities undertaken by accountants that result in reports or other output that is published, required by law or otherwise relied upon in the operation of the financial markets ('assurance services'); and
  • in relation to the independence, objectivity and integrity of external auditors and the providers of assurance services.

The Board intends to achieve its aims by

  • Establishing Auditing Standards which set out the basic principles and essential procedures with which external auditors in the United Kingdom and the Republic of Ireland are required to comply;
  • Issuing guidance on the application of Auditing Standards in particular circumstances and industries and timely guidance on new and emerging issues;
  • Establishing Standards and related guidance for accountants providing assurance services;
  • Establishing Ethical Standards in relation to the independence, objectivity and integrity of external auditors and those providing assurance services;
  • Taking an appropriate role in the development of statutes, regulations and accounting standards which affect the conduct of auditing and assurance services, both domestically and internationally
  • Contributing to efforts to advance public understanding of the roles and responsibilities of external auditors and the providers of assurance services including the sponsorship of research.
Financial Reporting Review Panel (FRRP)

 

Chairman: Bill Knight

Deputy Chairman: Ian Brindle
Secretary and Director, Panel Operations: Carol Page

 

The FRRP seeks to ensure that the provision of financial information by public and large private companies complies with relevant reporting requirements, having regard to international best practice.

 

The Panel:

  • carries out its responsibilities on behalf of the Secretary of State in relation to annual accounts and other documents falling within its remit;
  • maintains a Panel body that includes a wide and balanced representation, at the most senior level, of businesspeople, accountants, lawyers and preparers and users of accounts so that those who come before the Panel know that they are judged by their peers within the financial reporting community;
  • develops and operates a programme of review of annual accounts based on risk assessment;
  • enquires into accounts falling within its remit which come to its attention, whether through selection for review or through complaints;
  • ensures that any published findings of the Panel are brought to the attention of other authorities so that they can decide whether disciplinary or other sanctions should be applied;
  • liaises with the Financial Services Authority and other authorities in the United Kingdom and internationally to foster the consistent application of accounting requirements and to improve the compliance of financial information with reporting requirements;
  • contributes to and seeks to sustain a European Union approach to enforcement that is vigorous, consistent and cost-effective; and
  • seeks an appropriate level of recognition within the financial reporting community so as to maximise the Panel’s deterrent effect.
Professional Oversight Board (POB)

 

Chairman: Sir John Bourn KCB

Director: Paul George

 

The POBA aims to provide:

  • independent oversight of the regulation of the auditing profession by the recognised supervisory and qualifying bodies;
  • monitoring of the quality of the auditing function in relation to economically significant entities;
  • independent oversight of the regulation of the accountancy profession by the professional accountancy bodies;
  • independent oversight of the regulation of the actuarial profession by the professional actuarial bodies and promoting high quality actuarial work.

In relation to audit, the Board intends to achieve its aims by:

  • Discharging on behalf of the FRC the statutory responsibilities to be delegated by the Secretary of State for authorising professional accountancy bodies to act as supervisory bodies and/or to offer a recognised professional qualification. As part of this activity, the Board will ensure that:
    • The recognised supervisory bodies comply with all the statutory requirements for recognition set out in Part II of Schedules 11 and 12 to the Companies Act 1989;
    • the recognised supervisory bodies comply with the independent standard setting, monitoring and disciplinary arrangements which the legislation provides for.
  • Monitoring the audit quality of economically significant entities through an independent Audit Inspection Unit (AIU). The unit will monitor audit quality by reviewing audit processes including audit judgements. It will:
    • agree with audit firms amendments to their procedures where appropriate;
    • make recommendations to the recognised supervisory bodies for appropriate regulatory action; and where appropriate refer matters to the AIDB and the FRRP

In relation to the regulation of the accountancy profession, the Board intends to achieve its aims by:

  • Reviewing the regulatory activities of the professional accountancy bodies in relation to their members, including education, training, continuing professional development, standards, ethical matters (except those which are the responsibility of the Auditing Practices Board) professional conduct and discipline, registration and monitoring, including making recommendations on how these activities might be improved

In relation to the regulation of the actuarial profession, the Board intends to achieve its aims by:
  • Reviewing the regulatory activities of the professional actuarial bodies in relation to their members, including education, training, continuing professional development, ethical standards, professional conduct and discipline, practising certificates and monitoring, including making recommendations on how these activities might be improved;
  • Promoting a framework for effective scrutiny and monitoring of the quality of actuarial work, including compliance with actuarial standards in the UK, and reviewing its effectiveness.

The Board for Actuarial Standards (BAS)

 

Chairman: Paul Seymour

Director, Actuarial Standards: Nigel Bankhead

 

The overall aim is to establish and improve actuarial standards, primarily of a technical nature, to ensure that they are coherent, consistent and comprehensive. and thereby to help promote high quality actuarial practice.

The objectives are to:

  • Develop an appropriate conceptual framework to guide the setting of relevant actuarial standards, including the explicit objectives and characteristics of such standards.
  • Create a process for the development and adoption of standards which ensures that the objectives of the conceptual framework can be applied in practice.
  • Issue new relevant actuarial standards, or amend existing ones, in response to evolving commercial practices, economic developments and deficiencies identified in current practice with, where appropriate, written case studies or practical guidance in support of those standards.
  • Take account where appropriate of the regulatory requirements of the legislation, the Financial Services Authority, The Pensions Regulator and any other relevant regulatory body. Liaise with the Actuarial Profession regarding areas of practice for which new standards may be required or existing standards should be modified or clarified.
  • Consider the need for a generic standard for the communication of actuarial advice.
  • Address urgent issues promptly.
  • Liaise with the International Actuarial Association, other international bodies, national standard-setters and EU institutions on the development and application of international actuarial standards.

Links

Financial Reporting Council
Accountancy Investigation and Discipline Board
Accounting Standards Board
Auditing Practices Board
Financial Reporting Review Panel
Professional Oversight Board for Accountancy
The Board for Actuarial Standards