BEIS announces independent review of FRC

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The Department for Business, Energy and Industrial Strategy (BEIS) has published an independent review of the role and effectiveness of the Financial Reporting Council (FRC).

On 6 June 2018, BEIS published the ‘Independent Review of the Financial Reporting Council: Call for Evidence’. The review seeks to examine the FRC’s role and to understand stakeholder views on the FRC’s effectiveness.

The review seeks to gather opinion on:

  • Purpose and function: whether the existing functions (which includes responsibility for the UK Corporate Governance Code) and structure of the FRC are appropriate.
  • Impact and effectiveness: the strengths and weaknesses of the FRC in light of its role in audit regulation, accounting and financial reporting, corporate governance and stewardship, investigations, enforcement and compliance, as well as actuarial oversight.
  • Role in reducing the risk of major corporate failure: whether the FRC addresses this risk appropriately, responds quickly and effectively to warning signs and whether the viability statement could be more effective.
  • Powers and sanctions: whether there are gaps in the FRC’s powers and whether they should be extended regarding oversight and enforcement of non-accountant directors exerting influence over financial statements. The review also discusses whether the sanctions regime has the right deterrent effect.

In addition the review raises broad questions on the FRC’s statutory footing, the relationship between the FRC and Government and the internal governance of the FRC.

WM comment

Responses to the consultation are requested by 6 August 2018.