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Taking Stock: FRC falls foul of its own rules…almost

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MOST of us have, at one time or another, either broken our own rules or at least been tempted to.

We’ve all done it, and usually it doesn’t have much in the way of consequences, but most of us aren’t industry regulators.

Thankfully, in the FRC’s case, it caught itself before any mistakes came to pass.

Minutes from a meeting in December last year show a planned reshuffle affecting the FRC’s structure, the role of the board in the new structure and how the functions of audit, reporting and oversight would be organised. Under the changes, the FRC’s Councils would continue to sit under the codes and standards committee (CSC) together with the Financial Reporting Lab and a corporate reporting review committee. It was also was recognised that there could be some cross-reporting between CSC and conduct arms in respect of corporate reporting review matters if enforcement was to be pursued.

However, minutes from a more recent meeting in January show that the structural change cannot go ahead after the board was reminded of “the nature of the CRR function delegated to the Conduct Committee under statute and the reasons why the proposal tabled in December 2015 for a Corporate Reporting Review committee to sit under the CSC should be re-considered”.

“The Board agreed that such proposal would not proceed and that the CRR function remained within the remit of the Conduct Committee. The Board noted that the role of the Supervisory Inquiries team following implementation of the new executive and governance structure and the implementation of ARD [Audit Regulation Directive] were under consideration.

TS posits that while the error could have been an embarrassment for the FRC, its subsequent retractions shows the value of boards and good governance.

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