FRC in serious doubts over extended EU powers after referendum

The outcome of the recent EU referendum has raised significant questions about the future of the Financial Reporting Council (FRC).

The accounting watchdog has been recently handed extended powers under the new rules of audit regulation across the EU, and promises that by the end of 2019, at least 90 per cent of FTSE 350 audits will require no more than limited improvements.

But the powers, available only to the EU and with Britain soon to leave, may have put a spanner in the works

However, while the decision to leave the EU has not yet changed its regulatory framework, it has suggested concerns over its future.

“We will consequentially pay close attention to the decision now taken by government and Parliament, and continue to work in collaboration with our key stakeholders, particularly investors, business and the professionals we regulate, in order to ensure our work continues to support economic growth and the effective functioning of the capital markets,” said Win Bischoff, chairman of the FRC.

In the FRC’s annual report for 2015/16, the council commit to making improvements to audit quality and strengthening investor confidence.

“I have taken a personal interest in our ‘culture coalition’ project. In my experience, embedding a healthy corporate culture, with a focus on respect and good behaviour, is vital to the success of any business and creates an environment on which investors can depend. We have brought together a number of organisations to gather insight into corporate culture and the role of boards, to understand how boards can shape, embed and assess culture, and to identify and promote good practice”, Mr Bischoff added.