FRC launches consultation on three year strategy and annual plan and budget

On 17 December 2024 the Financial Reporting Council (the “FRC”) announced the publication of its draft three year strategy for 2025 – 2028 and its draft annual plan and budget for 2025 – 2026, both of which look at the shape of its future priorities. The FRC has asked stakeholders for their feedback in a consultation which will remain open until early February.

Both documents are structured around the FRC’s four key objectives, which are set out below.

1. Using its standards and expectations to enhance corporate governance, corporate reporting and investor stewardship in a way that supports UK economic growth and investment. It will do this by (for example) working with corporate entities to ensure an effective transition to the recently updated UK Corporate Governance Code and to ensure that the ongoing review of the UK Stewardship Code “supports high-quality investor stewardship and UK economic growth”.
2. Maintaining high standards of accounting, audit and actuarial work through regulation and dealing effectively and fairly with any significant shortcomings. This would include delivering a programme of Audit Quality Review inspections, the UK adoption of the International Standards on Auditing on fraud and going concerns and further work on the FRC’s Scalebox initiative to share best practices amongst smaller audit firms and develop their capacity and capability.
3. To build on the FRC’s deep understanding of corporate reporting and the audit and actuarial markets they oversee whilst maintaining agility and identifying upcoming opportunities and challenges. For example, the FRC intends to look at how Artificial Intelligence will effect the audit and actuarial markets and it will refresh the Sandbox initiative to trial new approaches to audit, assurance and reporting.
4. To be a modern organisation which is regarded as a respected, effective and highly engaged regulator and an inclusive and great place to work.

Other key areas of focus within the next three year period include:

• the reform of the FRC to the Audit, Reporting and Governance Authority, with new legislation to modernise its statutory powers and regulatory perimeter;
• the development of regulation of Public Interest Entity audit firms to develop their own systems and culture of audit quality performance; and
• the review of private capital participation in audit firm ownership as well as the future resilience of the profession and skills required.

“The purpose of the FRC is to serve the public interest and support UK economic growth by upholding high standards of corporate governance, corporate reporting, audit and actuarial work.”

Stakeholders are encouraged to provide their feedback on the consultation to [email protected] by 6 February 2025.

If you would like to discuss this consultation or any of the points raised in the draft strategy or budget in further detail, please speak to your usual contact at Burges Salmon or contact Charlotte Hamilton, AJ Venter or Nick Graves, head of the firm's Corporate Department.