RegulationCorporate GovernanceFRC proposes funding plan for IASB

FRC proposes funding plan for IASB

New plan includes funding arrangments for the IASB and collection of business levy

The Financial Reporting Council
has proposed a plan to collect minimum levies from companies, which will include
taking on the responsibility of collecting funds for the
International Accounting
Standards Board
.

The organisation is proposing to collect £550 from each company from 2008, to
replace the former system in which only a few companies paid substantial
amounts.

The FRC also proposes to extend the levies to overseas companies which have
listings in London, to reflect the FRC’s additional responsibilities form the
EU’s Auditing and Transparency Directives.

The FRC is seeking to raise a total of £4.2m through the collection
arrangements for the business levy in 2007/08. This comprises one third of the
FRC’s operating costs, £3.5m (compared with £3.1m in 2006/07), and the UK
contribution to the IASB, £0.7m.

In order to raise the sums required, the FRC has proposed an increase of £40
in the minimum levy and a 10% increase in the market capitalisation based rates
compared with 2006/07. The projected maximum fee payable by the largest listed
company is approximately £18,600.

In addition, the FRC announced that it is also consulting on the principle of
extending its business levy for 2008/09 and future years to include a wider
range of publicly traded companies, such as those on AIM and PLUS Markets. These
are within the scope of most of its regulatory responsibilities but which do not
currently contribute to its costs.

FRC chief executive Paul Boyle said the organisation is shaping and
implementing UK, EU and international requirements in relation to corporate
reporting and governance in ways that contribute to confidence and are sensitive
to the risk of imposing unnecessary burdens.

‘We believe that our activities represent good value for companies operating
in the UK,’ said Boyle. ‘We regard our proposal to recover the cost of the UK
contribution to the IASB as fair and cost-effective. We believe that it is
appropriate to include overseas companies with a secondary listing within the
scope of the levy, but to apply the same significant discounts as for those
overseas companies which already pay the levy.

‘We are also seeking comments on our view that a wider range of those
publicly traded companies who derive benefits from our work should contribute to
our costs from 2008/09.’

Further reading:

FRC
Announces Levy Proposals for 2007/08

IASB proposes change to company contributions

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