The Financial Reporting Council is the UK's independent regulator, promoting confidence in corporate governance and reporting. They aim to promote high standards through establishing the Combined Code. They set standards governing corporate reporting, as well as accounting and auditing standards.
They promise to use their influence and powers to promote a regulatory regime in which high standards of corporate reporting help businesses, investors and employees enhance economic strength.
Recently the Financial Reporting Council have been discussing the changing model of auditing and what information should be disclosed by auditors. The FRC has issued warnings that it is considering very carefully internal and external audit models, where a single firm provides for both sets of auditing work.
The Department of Business, Innovation and Skills is also looking at which relationships companies should declare to their auditors when they report in accounts, thanks to the FRC. In reality what this means is that companies may in the future have to disclose a wealth of contacts linked to directors.
Paul Boyle, chief executive of the FRC has recently left the organisation, having been its first boss who really set out what the FRC was all about. Since the first effects of the credit crunch were felt, the FRC has had an increased presence in national and international debate. The FRC has revolutionised accounting and financial reporting regulation.
The FRC has challenged the industry, and inspired some important debates about key issues concerning the profession. It has become highly respected by governments and businesses, although it has not necessarily received a warm reception from everyone.
Paul Boyle is most proud of avoiding disaster, which might sound like an over-the-top boast until you remember the problems faced by the Securities and Exchange Commission in the US, who have been criticised for not predicting and preparing for the credit crunch, and additionally ignoring warnings made about Bernard Madoff.
The key issue in the audit market is about the Big Four. While smaller firms regularly pop up, none are competing with the status that has been achieved by PricewaterhouseCoopers, Deloitte, Ernst & Young and KPMG.
Despite all the talk about healthy competition, the market remains dominated by these four firms, but maybe that is a problem which Paul Boyle's successor, Stephen Haddrill, will address. Whatever the future of auditing, the FRC are sure to play an integral and influential role. Arguably, we have them to thank for the economic stability experienced in the UK.