FRC confirms budget increase and hike in levy rates

An 8.5% hike in levy rates has been confirmed by the accountancy profession’s watchdog for the coming year.

The FRC said the additional funding will support an increase in its overall budget for 2013/14 to £24.5m, up from £24m last year. The amount allocated for its core governance, reporting and audit activities increased to £14.3m from £12.9m.

To pay for the necessary resources, the amount paid by preparers will rise by 2.8%, while the contribution from the accountancy professional bodies will increase by 8.9% compared to the actual contribution received in 2012/13. The increase over the amount requested last year will be 4.3%.

The amounts payable by prepares, the largest contributors to the levy, have been slightly rejigged since the budget was published in draft form in January. Following feedback from the consultation, the minimum levy will be increased by 2.8% rather than the 4.4% originally proposed, largely benefiting smaller publicly traded companies and public sector organisations.

According the FRC, the new resources will strengthen its ability to respond to international demands, scrutinise emerging issues and conduct research into the economic and business environment.

“We recognise that confidence in markets and companies remains critical for investors and longer term economic recovery. Our vision is of a future where the needs of investors are fully aligned with the corporate governance and approach to corporate reporting by companies and their auditors,” said Stephen Haddrill (pictured), chief executive of the FRC.

The FRC is also increasing its resources, which include an additional 12 full time members of staff, to further its work on the value of audit and the Sharman Report into going concern, the continuing work of its Financial Reporting Lab and influence international accounting standards.

In March, the FRC was named as one of 12 national and regional standard setters that will sit on the IASB’s Accounting Standards Advisory Forum, a body that provides technical advice to the global accounting standard setter.

“We participate and lead in technical discussions, international regulatory debates and discussions with governments and parliamentarians across the EU and elsewhere. Our contribution is already recognised,” said Baroness Hogg, chairman of the FRC, in the forward to its three-year plan and budget.

Last year, the FRC completed the most radical structural overhaul in its history, which saw it slash its seven operating arms down to just two. Under the new structure, one division sets governance guidelines as well as some accounting and auditing standards. The other focuses on enforcement and discipline.

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