FRC undershoots annual budget by £1.1m

THE FRC MANAGED to undershoot its annual budget for 2012/11 despite larger-than-expected costs for implementing its structural reform, annual accounts from the UK reporting watchdog show.

According to the FRC's annual report, total expenditure for the year 31 March 2012 was £21.1m, £1.1m lower than budget, with savings of £0.4m made on audit inspection costs and savings of £1m made on disciplinary case costs.

In the case of audit inspection, the reduced expenditure related to staffing and higher-than-expected recoveries from third-party work.

Core operating costs were £0.3m higher than expected at £15m, including an overspend of £0.2m on the cost of FRC reform.

Against the previous year, total expenditure increased by £1.4m, of which £1m was related to accountancy disciplinary case costs.

The FRC also replaced long-standing auditor Crowe Clark Whitehill (CCW) with PKF in October last year. CCW had been auditor since the FRC's inception in 1990, having successfully won a retendering contract in 2006.

Last week, the FRC amended the UK's governance code so that FTSE 350 companies will have to explain if they fail to put their audit out to tender at least every ten years.

Looking to the year ahead, Baroness Hogg, chairwoman of the FRC, said: "We will focus on the improvement of our codes and standards, our international influence, and the strengthening of our conduct work, including the enhancement and overhaul of the disciplinary scheme."