At the Financial Reporting Council we believe that the breadth of our responsibilities and functions enhances our effectiveness.  The FRC is the United Kingdom’s independent regulator for corporate reporting and governance, and aims to promote confidence in these crucial areas of business life.

In pursuit of this aim, our five key objectives are to promote high quality corporate reporting; high quality auditing; high standards of corporate governance; the integrity, competence and transparency of the accountancy profession; and our effectiveness as a unified independent regulator.

Implementing these objectives involves taking responsibility for setting, monitoring and enforcing accounting and auditing standards; statutory oversight and regulation of auditors; and operating an independent investigation and discipline scheme for public interest cases. We are also tasked with overseeing the regulatory activities of the professional accountancy bodies and promoting high standards of corporate governance.

Our functions are exercised by our operating bodies – the Accounting Standards Board, the Auditing Practices Board, the Professional Oversight Board for Accountancy, the Financial Reporting Review Panel and the Accountancy Investigation and Discipline Board – and by the FRC itself.

Some of our functions are supported by statutory powers, or by statutory obligations on other parties to meet our requirements – ‘’quasi-statutory’’ powers. Some of our functions have no statutory backing, but derive their authority from widespread support from our stakeholders.

We believe in wealth creation. We believe that our role in promoting confidence in corporate reporting and governance can make the creation of wealth more likely. We pay close attention to signals from the market, from investors and from other interests to ensure – through consultation and research – that we add value and do not impose unnecessary burdens.

The FRC is also committed to the Better Regulation Task Force’s principles of proportionality, targeting, consistency, transparency and accountability.

To this end, we work on the basis that a well-informed market is the best regulator and target the use of our powers, taking a proactive, risk-based and proportionate approach which includes making effective use of regulatory impact assessments.

We also emphasise principles and clarity in our standard-setting and rule-making and aim to be consultative – involving preparers, auditors, users of corporate reports and other regulatory organisations in our decision-making and allowing adequate time for consultation, without compromising our independence or confidentiality

The FRC also actively seeks to help shape EU and global approaches to accounting, auditing and corporate governance in ways that contribute to international confidence in corporate reporting and governance and to wealth creation. And we seek to be transparent, accountable and efficient in our work, and ensure that it receives appropriate publicity.

No system of regulation can eliminate corporate reporting or governance failures; zero failure cannot be achieved and any attempt to do so would destroy wealth rather than facilitate its creation. We can, however, influence the actions of those responsible for corporate reporting and governance.

We are funded by the business community (currently through listed companies), the accounting profession and by the UK government. Details on our approach to managing our costs and the way in which we are funded are contained in our financial management and reporting framework, which is set out on our website.

We are accountable for our work in several ways. We publish and invite comments on our annual plan and budget, and we will publish up to date information about our work, including summary minutes of meetings of the board, council and our operating bodies, subject to issues of necessary confidentiality.

The FRC also reports annually on our performance, identifies the progress we are making in achieving our objectives, and seek to demonstrate our effectiveness and efficiency in the way we use our resources. And we also make ourselves available for scrutiny by external auditors, by parliament, by stakeholders, and by the public through an annual open meeting. We published our plan and budget for 2005/06 just before Christmas.

We are conscious that 2005 is a year of major change for many companies, their shareholders and auditors. International accounting standards, the Operating and Financial Review and revised auditing standards will all have important implications for those involved in corporate reporting and governance. In these circumstances we are not proposing any major new policy initiatives for 2005/06 but are focusing on finalising those which are already underway. An important feature of our work will be to actively help shape the large number of policy proposals affecting corporate reporting and governance in the UK that are initiated by the EU and other international organisations.

Our major activities and projects for 2005/06 include increasing the pro-active enforcement of accounting standards and broadening the coverage of our independent inspection of audits.

We will also be updating the Turnbull guidance on internal control, issuing a reporting standard for the OFR, reviewing implementation of the revised Combined Code on Corporate Governance and developing a programme for convergence of UK accounting standards with IFRS.

The FRC is also taking on new statutory responsibilities for the regulation of auditing, contributing to the improvement of international standards on auditing, updating standards for reporting accountants in relation to investment circulars, and ensuring the effectiveness of the new independent investigation and discipline scheme.

We have sought to live up to our commitment to be a proportionate regulator by proposing a budget for core operating costs in 2005/06 which is flat in cash terms compared to our original budget for 2004/05.

Introducing a fairer basis for calculating the levy on listed companies and reviewing, in consultation with interested parties, whether other publicly traded companies should contribute to the costs of our work are other priorities.