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Directors' know how is a monthly article, which highlights key rule changes, proposed changes and market updates so that you know what is coming down the track.


FRC publishes 2018-21 Strategy and 2018-19 Plan and Budget

The Financial Reporting Council (FRC) has published its 2018-2021 Strategy and 2018-19 Plan and Budget following a public consultation.

The FRC’s 2018-21 strategic priorities include:

  • Promoting corporate governance and investor stewardship with a long-term focus. The FRC will publish a revised UK Corporate Governance Code in summer 2018 and closely monitor companies' compliance before consulting on the UK Stewardship Code in late 2018.

    The FRC will also assess the impact of its initiatives on the effectiveness of the board’s role in promoting the long-term success of companies, and the impact of the changing nature of equity ownership on the role of stewardship later in the strategy period.

  • Promoting true and fair reporting. The FRC remains committed to the Financial Reporting Lab, in order to champion the continued improvement in corporate reporting by monitoring annual reports and accounts and conducting targeted thematic reviews.

    The FRC will also respond to developments in wider corporate reporting, such as the Strategic Report. It will increase its focus on companies’ reporting under Section 172 of the Companies Act 2006 and the actions that directors have taken to promote the success of the company, including the impact on wider society.

Although the FRC confirmed that it would increase its total funding requirement by 1% in 2018-19, preparers’ levies will be frozen for 2018-19 and will continue to be collected on a voluntary basis.

The QCA Financial Reporting Expert Group contributed to our response to the FRC's consultation (which you can find here), where we broadly agreed with the FRC’s strategic priorities for the next three years and welcomed the proposals to reduce the minimum fee and the levy rates for levy bands one to five by 2.5% for organisations within the FRC’s preparers levy funding group.


Government launches independent review of the FRC

The government has launched an independent review of the FRC.

The review, led by Sir John Kingman (the current chair of Legal and General plc and UK Research and Innovation, as well as a former Second Permanent Secretary to HM Treasury), will assess the FRC’s governance, impact and powers, to help ensure it is fit for the future.

It will aim to report back to the Secretary of State for Business, Energy and Industrial Strategy, Greg Clark MP, and the FRC board by the end of 2018.

You can read the review’s terms of reference here.

We will be seeking our members' views on this shortly.


EU State Aid approval for EMI expires

EU State Aid approval for the Enterprise Management Incentives (EMI) scheme expired on Friday 6 April 2018.

The government explained that while it has applied to renew the approval of the scheme with the European Commission, this process has not yet been completed. 

This means that EMI share options granted in the period between Saturday 7 April 2018 and the date of EU State Aid approval may not be eligible for the tax advantages currently afforded to option holders. Share options granted in this period as EMI share options may be treated as non-tax advantaged employment-related securities options.

Following discussions with senior officials at HM Treasury, we understand that the government is working to ensure that this period is limited to only a few weeks.

Any share options granted up to and including 11pm, Friday 6 April 2018 should not be affected by this lapse of the approval.

If you have any concerns, you should seek professional advice.


IASB publishes the revised Conceptual Framework for Financial Reporting

The International Accounting Standards Board (IASB) has published the revised Conceptual Framework for Financial Reporting.

The Conceptual Framework sets out the fundamental concepts of financial reporting which the IASB must consider when it develops international financial reporting standards (IFRS). It helps ensure that the Standards are conceptually consistent and that similar transactions are treated in the same way.

The framework assists companies in developing accounting policies where there is no applicable Standard for a particular transaction, while also helping stakeholders better understand the Standards more broadly.

Specifically, the revised framework includes:

  • A new chapter on measurement;
  • Guidance on reporting financial performance;
  • An improved definition of a liability; and
  • Clarifications in important areas, such as the roles of stewardship, prudence and measurement uncertainty in financial reporting.

The framework is currently only available to Premium subscribers; Basic subscribers will be able to gain access in early 2019.

You can find more information here.


FRC Lab issues call for participation in the Digital Future: Artificial Intelligence

The Financial Reporting Lab (the Lab) is calling for listed companies, investors/analysts, technology experts and those with interest in the potential uses of artificial intelligence in the production and consumption of corporate reporting to participate in the next phase of its project, Digital Future.

The Lab will investigate how artificial intelligence and related technologies are, and will be, used in the production and consumption of corporate reporting data.

As always, the Lab is always particularly keen to receive the input from the small and mid-size quoted company community. Participation in a Lab project usually involves an individual interview of around an hour, and a roundtable of about two hours, exploring key topics and trends.

You can find out more about the project here.

If you are interested in participating, please email


Upcoming QCA consultation responses

Over the coming month, we will be submitting responses to:

If you have any views on these consultations that you would like us to include in our response, please email Callum Anderson at

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