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The Financial Reporting Council (FRC) has announced it may increase its budget by 11% to £38.1m, compared to its expected 2018/19 outturn of £34.4m.
Laid out it in its draft Plan and Budget 2019/20, the planned increase in 2019/20 will fund an expansion of its audit quality reviews, audit firm monitoring and supervisory approach and enforcement work.
The budget does not include certain costs the FRC cannot yet accurately forecast nor does it include the additional costs of Brexit and the government’s plans for the implementation for its transition to a new regulator, Audit Reporting and Governance Authority (ARGA).
The FRC said it expected it would require additional resources, estimated to be in the range of £2.4 to £4.9m, beyond the £38.1m budget. This will depend on government decisions following the consultation and EU exit. The FRC will agree with government how the additional resources should be secured.
Stephen Haddrill, chief executive officer at the FRC said: “In 2019/20, as we begin the transition to the new authority, ARGA, we will use our powers to promote the public interest in transparency and integrity in business.
“We are pursuing a step change in audit quality – revising audit and ethical standards, expanding our audit quality review regime, extending our audit firm monitoring and supervisory approach, and pursuing a heavier enforcement caseload. The audit market still faces much public scrutiny.”
He added: “We will work with the Competition and Markets Authority on its proposals for reform and with Sir Donald Brydon on his review of the role and purpose of audit. We are expanding our work to monitor the quality of corporate reports and leading debate on the future of corporate reporting. And we will be seeking substantially to enhance investor stewardship through a new Stewardship Code.”
