Empty building eats up a fifth of FRC budget
But regulator claims money put towards beefing up responsibilities was well spent
More than one fifth of the money given to the UK’s accounting watchdog last
year was spent on the lease of a building it no longer occupies.
In its first full year as a newly-expanded regulator, the Financial Reporting
Council was forced to make a one-off charge of £2.2m for the lease it took over
on the former premises of the now defunct Accountancy Foundation.
But by far the biggest cost incurred by the regulator was for salaries, with
permanent staff numbers rising from just 19 to 57 at the end of the financial
year.
FRC chairman Sir Bryan Nicholson was one of the major beneficiaries from the
beefed-up responsibilities of the watchdog. His renumeration trebled on the
previous year, up from £35,000 to £100,000.
The costs come out of total donations over the year by sponsors from
accountancy, business and government of £10.4m. Of this, an extra contribution
of £1m was made by the Department of Trade and Industry towards the lease
obligation.
The FRC said it intended to recover the balance of costs for the building
from sponsors ‘until the tenant’s break-point in the lease’ in 2010 At the end
of the 12 months to 31 March, the FRC had recovered £62,000.
Despite the large cost associated with the change in responsibilities and
premises, FRC chief executive Paul Boyle said the regulator was bringing huge
benefits: ‘Our experience has confirmed that bringing together in a single
organisation the functions for which we are now responsible is delivering more
effective regulation than would have been possible under the previous
arrangements.’
The recently published report on the inspections of the Big Four’s audits
also resulted in significant costs, with the Audit Inspection Unit’s work
costing just under £1m. The investigation into the audit work of automotive
engineering company Mayflower up to March cost £327,000.