FRC beefs up audit committee powers
Proposals will offer audit committees greater scope to detail how they have kept management honest
AUDIT COMMITTEES will wield greater power under proposed rules aimed at making annual reports clearer for investors.
The Financial Reporting Council (FRC) has released new proposals which would empower audit committees to speak out about how they have scrutinised management and also their view on the final annual report.
Under the proposals, audit committees will have a greater scope in the annual report to detail how they have discharged their responsibilities.
The initiaitive is part of a wider push by the FRC to beef up the annual report, which has been described as cluttered and uninformative.
The FRC will also create a “financial reporting lab” to road test innovations in corporate reporting.
Stephen Haddrill, chief executive of the FRC, said annual reports have become more cluttered in recent years.
“Annual reports are more than marketing documents: they are a vital source of narrative and financial data which are used by shareholders to make investment decisions,” he said.
“We want to encourage all companies to follow the example of the best. We believe it is particularly important that directors explain clearly how they identify and manage risk and what keeps them awake at night”.