By Paul Cummins FCCA AITI MSc.Multimedia Systems 10 January 2005

Financial Reporting Council ( UK) Strategy for 2005 for Financial Reporting

The Financial Reporting Council (FRC) is a unified, independent regulator.  Its aim is to promote confidence in corporate reporting and governance. 

The Financial Reporting Council (FRC), the UK 's unified, independent regulator for corporate reporting and governance, published its Regulatory Strategy and its Plan & Budget for 2005/06, on 21 December 2004. As part of that its particular strategy on improving Financial Reporting is set out below:

Objective 1 - Promote high quality corporate reporting

a) Contributing to the development and implementation of IFRS

• Work with the IASB, other national standard-setters and EU institutions to develop high
quality IFRS, including:

o joint projects to develop accounting standards and the principles to guide future standards
o leading the IASB's leasing project and participating in IASB groups on reporting
comprehensive income and management commentary
o monitoring all IASB (including IFRIC) projects, including important new projects on
insurance phase 2 and the longer-term thinking on financial instruments.

b) Influencing EU policy on accounting standards, including the endorsement of IFRS

• Contribute to EFRAG and continue to push for the speedy adoption of IFRS by the EU.
• Respond to IASB and EFRAG consultations on IFRS proposals.

c) Making progress on the convergence of UK accounting standards with IFRS

• Publish detailed plans for convergence in the light of the responses to our Discussion Paper
'UK Accounting Standards: A Strategy for Convergence with IFRS' and the IASB's proposed
timetable.

d) Improving other aspects of UK accounting standards

• Continue work on:

o insurance accounting
o a 'one-stop shop' FRSSE
o an interpretation of the 'Statement of Principles for Financial Reporting' for Public Benefit
Entities
o maintaining and reviewing SORPs.

• Addressing urgent issues requiring interpretations which arise during the year.
Financial Reporting Council 4

e) Improving communications between companies and investors, including developing and
implementing standards for the OFR

• Issue a reporting standard and implementation guidelines for the OFR.

f) Pro-actively enforcing accounting and other corporate reporting standards

• One of the major decisions resulting from the Government's review of the regulatory regime
for accountancy and auditing was that the enforcement of accounting standards should be put
on a pro-active basis rather than the previous complaints-driven basis. This decision has led to
a significant increase in the resources devoted to enforcement. In 2004/05 we started to
implement a pro-active approach and we shall continue to increase our resources in 2005/06.
• We will extend our enforcement programme by:

o reviewing the annual accounts of a wider range of entities
o reviewing, for the first time, interim accounts
o introducing new selection criteria.

• The range of organisations whose accounts may be reviewed will be increased to include UK
non-corporate entities and non-UK entities which have certain securities listed in the UK.
• We will review interim accounts, starting with those prepared for periods beginning on or
after 1 January 2005.
• Advised by the Standing Advisory Group on Pro-activity, we will apply selection criteria
based on industry sectors, specific accounting requirements and company-specific trigger
factors:

o In 2005/06 we will focus on the following industry sectors: automobile, pharmaceutical,
retail, transport and utilities.
o In terms of specific accounting requirements we will focus on entities whose annual
accounts are expected to undergo significant change as a result of IFRS.
o We will continue to place particular emphasis on FTSE 350, but will also include smaller
listed companies, other publicly traded companies, public limited companies and large
private companies.

• We will continue to respond to matters drawn to our attention as a result of complaints or
public comment, encouraging referrals from the City and elsewhere.
g) Influencing EU policy and practice on the enforcement of accounting standards
• Contribute to the development of a consistent and appropriate approach to the enforcement
of accounting requirements across the EU through our role as technical adviser to the FSA on
the CESR-Fin Sub-Committee on Enforcement, and as an active member of the European
Enforcers Coordination Sessions in which all EU national enforcement authorities participate.

There are many graphics on the website http://www.metaphorbusinessgraphics.com in the Financial Reporting section,dealing with recent regulatory reporting developments.