The UK’s Financial Reporting Council (FRC) has published a Position Paper to set out the next steps to reform the UK’s audit and corporate governance framework.
This paper follows the Government Response to the consultation on strengthening the UK’s Corporate Governance, Corporate Reporting and Audit systems. This includes the creation of the Audit, Reporting and Governance Authority (ARGA) as a replacement regulator for the FRC.
This document builds on the areas of the Government Response within the FRC’s remit. This provides further information on how the work of reform will be delivered before government legislation.
This work includes revising existing codes, strengthening auditing and accounting standards, setting expectations to drive behavioural change ahead of statutory powers, and the development of guidance to address issues specified in the Government Response.
The Position Paper includes proposed changes to the UK Corporate Governance Code. This will provide a stronger framework for reporting on the effectiveness of internal controls and Board responsibilities for expanded sustainability and ESG reporting. There is also guidance on enhanced resilience statements and fraud reporting by directors.
FRC CEO John Thompson said: “These long-awaited reforms are a once-in-a-generation opportunity to ensure corporate Britain upholds the highest standards of governance and protects those stakeholders who rely on high-quality reporting.
“While we await Government legislation, the FRC is pressing ahead with those changes to standards and codes which will improve and enhance the UK’s audit and corporate governance framework and to lay the groundwork for the creation of ARGA.”