By Paul Cummins FCCA AITI MSc.Multimedia Systems 7 January 2005

Financial Reporting Council ( UK) Strategy for 2005

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.

The FRC took on significant additional responsibilities on 1 April 2004 as recommended in the Government's reviews of the regulatory regime following the Enron and WorldCom scandals in the US . The FRC's functions are exercised by its five operating bodies and by its Council.

Since 1 April the FRC has made substantial progress in implementing the new regime. Activities started in 2004 include: the Financial Reporting Review Panel is reviewing accounts on a pro-active, as opposed to its previous complaints-driven, basis; the Professional Oversight Board for Accountancy has established an Audit Inspection Unit which is reviewing the work of auditors of public interest companies; the Auditing Practices Board has issued Ethical Standards for auditors; the Accountancy Investigation and Discipline Board has taken on its first case ; and the Accounting Standards Board has issued a draft reporting standard on the Operating and Financial Review.

The Regulatory Strategy explains that the FRC's aim is:

“To promote confidence in corporate reporting and governance.”

The Strategy sets out the FRC's key objectives, which are to promote high quality corporate reporting and auditing, high standards of corporate governance and the integrity, competence and transparency of the accountancy profession.

The FRC will follow the Better Regulation Task Force principles which require regulators to be proportionate, targeted, consistent, transparent and accountable. It is helped in this approach by the involvement of a wide range of business, investor, professional and other interests as members of its Council and its operating bodies.

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

The introduction in 2005 of international accounting standards, the Operating and Financial Review and revised auditing standards means that those involved in corporate reporting and governance are facing a period of significant change and a heavier-than-usual workload.

In recognition of this the FRC is not proposing any major new policy initiatives for 2005/06. It will focus on completing those projects which are already underway and on making further progress in implementing the additional responsibilities it has been given. Those activities include:

· increasing the pro-active enforcement of accounting standards

· broadening the coverage of our independent inspection of audits

· updating the Turnbull Guidance on internal control

· issuing a reporting standard for the Operating & Financial Review

· reviewing the implementation of the revised Combined Code on Corporate Governance

The FRC will also actively engage in influencing corporate reporting and governance proposals from the EU and other international organisations, with the aim of ensuring that they add to confidence without creating disproportionate burdens on business.

The FRC is funded by the UK government, the accounting profession and by business