FRC to raise levies as government funding withdrawn
ANNUAL LEVIES to the FRC are to rise 14% in 2016/17 as it seeks to make up the shortfall for audit regulation compliance monitoring, the body has confirmed in its annual budget.
The overall budget is set at £33.5m, with £19.9m earmarked for core operating costs and £13.6m allocated to corporate governance and reporting.
In Febraury, FRC chief executive Stephen Haddrill made clear at the FRC’s annual priorities meeting that the “audit profession will pay for its regulation” through increased levies as the government no longer contributes to the watchdog’s funding, while new EU audit legislation requires the FRC’s work in audit to be securely funded.
Confirming that move in the budget, a 14% increase in the preparer’s levy is brought in, rising from £13m to £15m. The largest increases are borne by major listed financial institutions.
The FRC is also allocating an additional £1m to support its new role as the UK competent authority for audit regulation, which commences in June 2016. This includes £400,000 for audit quality review activities, which is staff-related, and £600,000 for core costs, plus increased overheads of £200,000.
The operational costs for this year include an additional £1.5m to fund the FRC’s other work in corporate governance and reporting compared to the 2015 spend.
The FRC’s total staff costs are put at £20.1m in 2016/17 compared to the £18m currently estimated for this year.
A recruitment drive will be undertaken, the FRC said in its accompanying report, to help in its role as competent audit authority.
It said: “Staff costs, the largest item, will increase in 2016/17 as we complete the process begun in 2015/16 of recruiting additional staff to deliver our new responsibilities as single competent authority under the audit recruitment directive, and implement our new approach to our corporate reporting and audit quality monitoring activities. Some of the recruitment took place across 2015/16 (10 roles, of which 5 are audit related). More will be needed in 2016/17 (a further 10 roles, of which 8 are audit related).”