Our Financial Reporting Expert Group contributed to our response to the FRC's Draft Plan & Budget and Levy Proposals 2017/18.
We generally supported the FRC's proposed priorities and work programme for 2017/18, although we encouraged the FRC to define the concept of quality and how it will be measured.
We noted that the FRC's priority to update the UK Corporate Governance Code seemed to contradict the FRC's Strategy for 2016/19, which stated its intention to avoid changes to codes and standards for at least the duration of the strategy period. We encouraged the FRC to be clear in any future consultation to clearly specify what has arisen during the course of 2016/17 to cause a change in strategy.
We welcomed the intention to look at enhancing the speed and effectiveness of the FRC’s enforcement role and recommended that the FRC review the timeline for Corporate Reporting Reviews (CRR). We noted that smaller companies are notified that their annual accounts will be reviewed at a later stage in the year, leading to them having less time to respond to CRR prior to their next accounts being due. We encouraged the FRC to review this practice, so that smaller companies have sufficient time to effectively respond to a CRR enquiry.
We commented that although the FRC was expanding its role as the competent authority for audit regulation and the resulting expansion of the scope of its responsibilities, this did not fully explain the increase in expenditure of 5.3%. We encouraged the FRC to be more transparent in disclosing the reasons for any above inflation increases in future budgets.
We welcomed the fact that the minimum fee and levy rates for companies with a market capitalisation under £1bn will be limited to 2.5%.
