On April 17, 2018 the Department for Business, Energy, and Industrial Strategy (BEIS) invited Sir John Kingman, supported by an advisory group, to carry out an independent review of the Financial Reporting Council (FRC). The review will assess the FRC’s governance, transparency and independence, and ensure it is fit for the future.
The terms of reference of the review include the following:
Given that the FRC is a public body, the review will consider whether current governance arrangements and their transparency are suitable. The review will also consider the increasing expectations on private companies, surrounding the anticipated changes to the Corporate Governance Code.
The review will consider whether the FRC is sufficiently independent from the Government and from those whom it regulates. The review will also investigate whether there are safeguards in place to ensure and assure that independence. Where independence is found to be insufficient, the review will propose how this might be addressed.
In addition to the question of independence, the review will examine the FRC’s ability to carry out its broad range of functions and responsibilities without conflicting, or being seen to conflict with other functions.
Power and impact
The review will assess whether the current legal bases for FRC activities are adequate and whether any extension of powers is necessary, advisable or recommended.
BEIS notes that it is vital that the FRC is seen to uphold high standards and deter inadequacy and wrong-doing, as well as incentivise compliance. The review will consider what changes would best enable the FRC to achieve these goals and ensure that the FRC can lead globally on issues of governance.
The review will incorporate a public consultation. Once the final report has been published, the Government will consult on its response to the review’s recommendations. The review intends to submit its findings to BEIS and the FRC Board by the end of 2018.
(BEIS, Independent Review of the FRC, 17.04.18)