FRC publishes three year plan and budget to prepare for transition to ARGA
The Financial Reporting Council (FRC) has today published its 3-year Plan for 2022-25 as the watchdog prepares to transition to the Audit, Reporting and Governance Authority (ARGA).
The plan contains a detailed breakdown of intended expenditure for 2022-23 and a summary of the expected trajectory of overall costs and headcount for the following two years.
As the FRC awaits the Government response to its consultation, Restoring trust in audit and corporate governance, its planning assumes that the FRC will be granted regulatory powers and funding on a statutory footing during the three-year period covered by this plan.
The plan, therefore, reflects the FRC’s views and expectations on the likely operational impact of the change in the FRC’s status.
Sir Jonathan Thompson, FRC CEO, said: “2021 was another year of exceptional change for the FRC and all our stakeholders. We developed a comprehensive supervision approach to support a better understanding of our audit quality and saw pleasing traction with a new approach to audit firm supervision.
“We continued to set a high bar with a rigorous review process to determine the first signatories to the Stewardship Code. Our work with stakeholders continues and we have seen record engagement levels with our series of online webinars and roundtables about key BAU and reform agendas.”
He continued: “It’s been pleasing to see the FRC lead on providing guidance and insights on expectations for corporate reporting, audit, accounting, actuarial and governance throughout the year, including the critically important issues of climate and ESG reporting. And in Enforcement we saw demonstrable improvement in the time taken to resolve cases as well as a significant increase in the number of cases resolved through Constructive Engagement.
“Our three-year plan will build on our approach so far and we will continue to strengthen our corporate services support during the period of growth – from recruitment and training, to finance systems and risk management.”
In setting out this plan, the FRC have considered how, and when, it will need to increase the capacity to adapt to new powers and responsibilities.
In 2022/23 overall costs are expected to increase by £9.1m. The FRC anticipates similar growth in 2023/24, being the year in which we expect ARGA will be created and the first year of statutory funding, followed by a period of stability and consolidation from 2025 onwards.
The 2022/23 Strategy and Plan & Budget consultation will run until Tuesday, 1st March.