The UK Financial Reporting Council (FRC) wants to tap large
private companies and public sector organisations to help fund its
responsibilities for regulating accounting, auditing and corporate
governance.
The regulator has released a new funding proposal following the
UK government’s announcement in February 2008 that these costs
should be funded largely by market participants. At present, the
government pays about a third – approximately £3.5 million ($7
million) a year.
The FRC said its funding costs should be met by the major groups
of market participants that are subject to, or have regard to, the
regulatory requirements which it sets, influences, monitors or
enforces.
It intends to replace the government grant through a combination
of expanding the group of market participants who contribute to its
costs and increasing the contribution from existing
contributors.
Large private companies and public sector organisations are two
groups the FRC has identified that are subject to its regulatory
requirements but do not currently contribute to its costs. The FRC
has estimated the size of the contribution from these two groups if
they were subject to its levy on publicly-traded companies, basing
the contributions from private companies on turnover, and from
public sector organisations on expenditure.
The proposal applies discounts to both groups to reflect the
fact that not all the FRC’s regulatory activities apply to them.
For private sector companies, a 50 percent discount has been
proposed; for public sector organisations it is 75 percent, which
reflects the fact that although the FRC is not responsible for
setting public sector accounting and audit standards, the public
sectors has regard for FRC standards when it sets its own.
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By GlobalDataOn the basis of its 2008/09 budget of £11.9 million for its core
activities in relation to accounting, auditing and corporate
governance, the FRC estimated private companies would contribute 11
percent of its funding (£1.3 million) and public sector
organisations 5 percent (£500,000).
The two existing groups of contributors – the professional
accountancy bodies on behalf of the accountancy profession and
publicly traded companies – would see their shares of funding
contributions rise from one-third to 42 percent each.
