The UK’s Financial Reporting Council (FRC) has set out its plan to transition into the new regulator Audit, Reporting and Governance Authority (ARGA), alongside other reforms based on the Kingman review.
While legislation will be needed to establish ARGA, the FRC has said it will work with the government to implement aspects of the transition which can be undertaken or initiated in advance of the legislation.
These steps include expanding its work on the quality of the part of an audit conducted overseas, preparing to extend its scope of corporate reports to cover the whole annual report, and broadening work on oversight of the accountancy profession.
The FRC is also preparing to apply Freedom of Information provisions to all its work prior to formal designation as a public authority.
In March this year, the UK government backed the proposals from the Kingman review, which was commissioned to assess if the FRC is fit for purpose, and decided to replace the FRC with ARGA. The Government is currently in the process of appointing new leadership at the regulator.
The FRC faced a raft of criticisms following the collapse of construction company Carillion in early 2018. The high-profile collapse put the public spotlight on the audit profession and both regulator and firms were heavily criticised in their involvement, or lack of, in the company’s collapse.
A number of reviews have since been undertaken in order to improve the stability of the audit profession in the UK.
FRC CEO Stephen Haddrill said: “The FRC’s Plan sets out a clear pathway towards the establishment of an enhanced authority, with stronger powers and greater resources, as quickly and effectively as possible.
“Ahead of full implementation of the Kingman proposals, the FRC will do all in its power to promote transparency and integrity in business, and improve audit quality, corporate governance and investor stewardship.”