The UK’s Financial Reporting Council (FRC) has outlined its progress to transition to the Audit, Reporting and Governance Authority (ARGA) in its draft 2021/22 Strategy, Plan & Budget.
Over the past year, the FRC has worked on implementing changes recommended in the three independent reviews into the UK audit market (Kingman, Brydon and Competition and Markets Authority) that are not dependent on changes to legislation.
Due to the increased capacity and actions to be carried out based on the recommendations, the FRC expects its total costs to increase by £6.8m ($9.3m) to £52.2m in 2021/2022.
FRC CEO Jon Thompson said: “Last year we set out a strategy to take the FRC through a period of significant transformation to create ARGA. Our transformation programme has proceeded with vigour, delivering reform which is not dependent on legislation, and developing the policy and resourcing options where legislation is required. By maintaining momentum as we deliver on our strategy, our intention is to create ARGA, fully formed, as soon as the legislation permits.
“In this Plan and Budget, we have assumed a further two-year transition period to the creation of ARGA in 2023. We will also be reviewing and implementing a new funding model, ahead of it being put on a statutory footing. We look forward to engaging with stakeholders on the detail of ARGA’s funding proposals in due course.”
Last week, the Financial Times reported that the UK’s business secretary, Kwasi Kwarteng, intends to publish a white paper on audit reforms as early as this week, which will push forward many of the major recommendations from the independent reviews