Updated: 25 Feb 2011
Country
United Kingdom
1. Organization
Insert the name of the Organization, both in the local language and in English
Financial Reporting Council
Include the basis for establishment and the mission/responsibilities and
authority re auditing
The Financial Reporting Council (FRC) was first established in 1990. During 2002,
following the collapses of Enron and WorldCom, the UK Government undertook a
review of the regulatory framework in financial reporting and governance in the
UK. In 2003 the UK Government announced reforms to raise standards of
corporate governance, strengthen the accountancy and audit professions, and
provide for an independent system of regulation for those professions. As a result
of these reforms, the FRC’s responsibilities were greatly expanded in 2003 to
include the functions of the Accountancy Foundation, the independent, nonstatutory regulator established by the UK Government in 2000.
The FRC’s role was further expanded when it took responsibility for setting
actuarial standards and oversight of the regulation of the actuarial profession as a
result of recommendations in the Morris Review of the UK Actuarial Profession in
March 2005. On the 1 April 2006, the new FRC operating body, the Board for
Actuarial Standards (BAS), was established.
The FRC is the UK's independent regulator with the primary responsibility in the
UK in relation to corporate governance, reporting, auditing, actuarial practice and
the professionalism of accountants and actuaries.
Page 1 of 5
Updated: 25 Feb 2011
2. Board
Composition
and Members
Describe the current composition of the Board, the requirements for the Board
members. Also include whether there is a cooling-off period for former
auditors/practitioners.
FRC Ltd Board
Chair
Baroness Sarah Hogg
Deputy Chair
Glen Moreno
Chief Executive
Stephen Haddrill
Non-Exec Directors
Elizabeth Corley
Rudy Markham
Nick Land
Keith Skeoch
Sir Steve Robson
Peter Chambers
Executive Directors
Roger Marshall
Bill Knight
Operating Body
Chairs
John Kellas
Richard Fleck
Jim Sutcliffe
Timothy Walker
The FRC’s Board has up to 20 Directors including a Chair and Deputy Chair
(appointed by the Secretary of State for the Department of Business, Innovation
and Skills), the Chief Executive, the Chairs of the six operating bodies and up to 11
non executive Directors. The non executive Directors form a majority of the Board.
The FRC’s functions are carried out by its six operating bodies:
• Accounting Standards Board (ASB)
• Auditing Practices Board (APB)
• Board for Actuarial Standards (BAS)
• Financial Reporting Review Panel (FRRP)
• Professional Oversight Board (POB)
• Accountancy and Actuarial Discipline Board (AADB)
The operating bodies and the Board are and will be supported by the FRC’s
professional staff (“the Executive”) for which the Chief Executive is responsible.
Page 2 of 5
Updated: 25 Feb 2011
Are the majority of the governing body non-practitioners?
Yes
No

3. Funding
arrangements
Describe the main funding arrangements, including the setting and approval of
the budget and the fees, if any.
The FRC’s core operating costs in relation to accounting, auditing and corporate
governance are currently funded by an arrangement under which the costs are met
by the business community, the accountancy profession and by the UK
Government (the proportion of Government funding is reducing). Core operating
costs in relation to actuarial standards and regulation are funded by contributions
from the pensions and insurance industries and the actuarial profession.
Is the funding free from undue influence by the profession?
Yes
4. Inspection
system
No
Describe whether inspections are performed by the Member body, or, whether
or not in part, by any other organization. If so, also describe the arrangements
for overseeing these inspections.
The FRC has responsibility, which is delegated to it from the UK Government, to
provide independent oversight of the regulation of the UK auditing profession by
the recognised supervisory and qualifying bodies for audit in the UK. Through the
POB's Audit Inspection Unit, it directly inspects auditors of public-interest entities.
Do you have the responsibility for recurring inspections of audit firms
undertaking audits of public interest entities?
Yes
No
Is this responsibility directly or through oversight of inspection undertaken by
professional bodies
Directly
Through oversight
Page 3 of 5
Updated: 25 Feb 2011
5. Audit and
Financial
Market
Describe the number of audit firms subject to inspections. Include an indication of
the number of public interest audits and other audits in the jurisdiction. Please give
some indication of the size and market share of each of the largest audit firms.
Number of Audit Firms Subject to Inspections
The UK Audit Inspection Unit (AIU) of the FRC conduct reviews of firms with
more than 10 public interest audits - there are nine such audit firms subject to full
inspection by the AIU.
There are an estimated further 40 firms with less than 10 public interest audits,
where the AIU reviews the audit work of their public interest audits and delegates
the independent inspection of the firm to the Monitoring Bodies of either the
Institute of Chartered Accountants in England and Wales (ICAEW) or Institute of
Chartered Accountants in Scotland (ICAS) to undertake the primary review of the
firm.
Number of Public Interest Audits
There are an estimated 1,850 Public Interest audits.
Size and Market Share of each of the Largest Audit Firms
The relevant size of each of the nine largest firms is estimated as follows:









Baker Tilly UK Audit LLP – 1%
BDO Stoy Hayward LLP – 3%
Deloitte LLP – 18%
Ernst & Young LLP – 14%
Grant Thornton UK LLP – 6%
Crowe Clark Whitehill – 1%
KPMG LLP and KPMG Audit Plc – 22%
PKF (UK) LLP – 3%
PricewaterhouseCoopers LLP – 25%
The above analysis is expressed as a percentage of estimated public interest audits.
Were the analysis to be expressed as a percentage of market capitalisation of all
fully listed and AIM companies, it would show Big 4 firms have approximately
98% market share and the other large firms have approximately 1% market share.
Page 4 of 5
Updated: 25 Feb 2011
6. Main other
tasks performed
by Member
Describe whether the Member also performs other tasks, such as registration,
education, standard setting and enforcement in the area of auditing, or other
supervisory tasks, such as supervision of financial reporting or securities
regulation.
The FRC’s functions are carried out by its six operating bodies:
• Accounting Standards Board (ASB)
• Auditing Practices Board (APB)
• Board for Actuarial Standards (BAS)
• Financial Reporting Review Panel (FRRP)
• Professional Oversight Board (POB)
• Accountancy and Actuarial Discipline Board (AADB)
The POB oversees the audit registration, supervisory and educational activities of
the UK professional accountancy bodies.
7. Other
information
Include relevant contact information, including postal address, telephone
numbers, a link to the website and other relevant information.
Website: http://www.frc.org.uk/
Address: 5th Floor Aldwych House, 71-91 Aldwych, London WC2B 4HN
Contact: Jon Hooper, Head of International Relations, j.hooper@frc.org.uk, +44 207
492 2344.
Page 5 of 5