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FRC ‘should close’, says Kingman
18 December 2018
The FRC should be replaced as soon as possible with a new independent regulator with clear statutory powers, says the much awaited Kingman Report
Sir John Kingman appears to have put the final nail in the FRC coffin. His ‘Independent Review of the Financial Reporting Council’ says the FRC must be replaced with an Audit, Reporting and Governance Authority, accountable to Parliament.
He wants a new board to be public appointed, with some limited continuity with the existing board. It should, however, be significantly smaller than the FRC’s current set-up. Among the appointment there must also be “representative’s of stakeholder interests”.
Sir John’s report stressed the new ARGA chair and CEO need to be subject to a pre-approval hearing with the BEIS Select Committee, and would have to appear annually in front of the Select Committee.
In the near future, Kingman wants his the new body to publish individual audit quality inspection reports, including gradings, in full.
He felt the regulator’s corporate reporting work should also be extended from its current limited scope to cover the entire annual report. And to this end it should be given stronger powers to require documents and other relevant information in order to conduct that review.
The new regulator should not be funded on a voluntary basis, says the report. Instead the BEIS should put in place a statutory levy.
Sir John emphasized for the foreseeable future, the new regulator should not allow staff, or board or committee members ever to work on any regulatory functions relating to a past employer.
Business Secretary, Greg Clark, said: “The government will take forward the recommendations set out in the Review to replace the FRC with a new independent statutory regulator with stronger powers.”
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