UK FRC STANDARDS AND GOOD PRACTICE
The UK Financial Reporting Council (FRC) is responsible for promoting high quality corporate governance and reporting to foster investment. They set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. The FRC represent UK interests in international standard-setting, monitors and takes action to promote the quality of corporate reporting and auditing.
- The UK Corporate Governance Code is based on the underlying principles of good governance: accountability, transparency, probity and a focus on the sustainable success of an entity over the longer term.
- The Stewardship Code sets out the principles of effective stewardship by investors which help build confidence in the system and give force to the ‘comply or explain’ system on which the Corporate Governance Code is based as well as increasing accountability to clients and beneficiaries.
Though unlisted companies may comply with the code, the listing rules require premium listed companies to apply the main principles and report to shareholders on this.
FRC Roles and Responsibilities
The UK FRC promotes trusted behavior and information by:
- Monitoring the quality of accounts published by public companies in line with the legal framework including accounting standards and the overriding requirement to give a true and fair view.
- Monitoring and reporting publicly on the quality of the audit of listed and other major public interest entities and the policies and procedures supporting audit quality at the major audit firms in the UK and determining proportionate sanctions where necessary.
- Oversight of the regulatory activities of the accountancy and actuarial professional bodies.
Meeting the FRC Standards and Good Practice
Based on several ongoing projects, the FRC addresses the importance of regular and systematic assessment of the risks at a business, and the value of risk management and internal control systems within business processes, is stressed. The responsibility to communicate the importance of the internal control statement is handed over to the board. The FRC recommends an internal control statement to be part of any company’s annual report. An internal control statement provides an opportunity for the board to help shareholders understand the risks facing the company.
Getting a better Internal Control Framework
BWise assists an organization with UK FCR standards with its Governance, Risk and Compliance (GRC) solutions. The Nasdaq BWise Internal Control solution allows managers and stakeholders to set and test controls and create an internal control framework. From this framework Key Risk Areas can be found and reviewed. Using the Nasdaq BWise Internal Control solution leads to better risk management and financial reporting, fulfilling the requirements of the UK Corporate Governance Code and Stewardship Code.
Guidance on Audit Committees
The FRC provides recommendations on the audit committee’s establishment and effectiveness, relationship with the board, role and responsibilities and communications with shareholders. The Nasdaq BWise Internal Audit solution assists in this area. A public company’s internal audit department is regularly assessing the company, its employees and its controls. Nasdaq BWise Internal Audit solution presents a well-rounded solution for an internal audit department providing audit planning, audit work assignments, working paper management, audit workflow management and comprehensive audit reporting.
Nasdaq BWise GRC solutions enable stakeholders and management to measure and manage risks and to comply with the standards and good practice from the UK FRC.