2022 UPDATE | UK Financial Reporting Council

In recent years, the FRC has been the subject of scrutiny relating to its ability to effectively regulate the audit sector. In 2018, the UK government launched an independent review of the agency, headed by Sir John Kingman, then Chair of UK Research and Innovation. The review found that the FRC has several serious constraints on its ability to set effective standards for governance and audit, including a lack of statutory base, government direction that it delegates to industry bodies wherever possible, and little practical regulatory power over the industry. ¹

As a result of these deficiencies, Kingman recommended the creation of a formal regulatory body to succeed the FRC, called the Audit, Reporting, and Governance Authority (ARGA). “The regulator should have an overarching duty to promote the interests of consumers of financial information, not producers,” the report says. “It should also have a duty to promote competition; a duty to promote innovation; and a duty to apply proportionality to all its work.”