The Financial Reporting Council (FRC) has increased its budget to £72m and has frozen plans to hire more staff, but will still move to Birmingham
The total budget of £72m for 2024-25 is up 8.6% on the previous year’s £67.9m, although the regulator said the increase was 5% lower than expected due to the impact of inflation.
There were initially plans to increase headcount by 16% for the 2024-25 year from the current 487 full-time staff, but this has now been put on hold as the government has not made progress on creating the new regulator and the plans for the new regulator are on ice.
This is due to the absence of legislation for the FRC to be changed to the Audit, Reporting and Governance Authority (ARGA).
The FRC said: ‘We remain of the view that ARGA powers are both necessary and proportionate to expand and modernise our toolkit, but they are a means to an end of being a modern, effective and respected regulator which drives high-quality public interest outcomes.’
However, there was an increase in headcount through the 2023-24 period, with the FRC expecting its ‘cash budget to rise as the full year’s cost is realised’.
The headcount was intended to grow to the equivalent of 516 full time staff for the 2024-25 period but is now expected to be frozen at the 2023-24 level of 487. In 2023-24 a new office has been opened in Birmingham in which 5% of the staff will be relocating, with initial plans to recruit there now delayed.
The FRC said: ‘The actions we are taking on headcount, costs and prioritisation of our activities for this plan and budget reflects the changed environment in which we are now operating.’
There are also plans to relocate the London Wall office closer to other regulators and government departments to create an ‘enriched working experience’.
The £72m will be divided between three departments within the FRC. The audit and accountancy funding groups will receive £39.8m, companies (accounts preparers) will get £26.3m and actuarial funding groups £3.7m. Two further sections will receive the final £2.2m.
Richard Moriarty, CEO of the FRC said: ‘This draft plan aims to consolidate and prioritise our work where it can best contribute to improved public interest outcomes across the FRC’s broad remit. As ever we look forward to engaging with our stakeholders on the proposals.’
There will be an increase of 13.5% on the preparers levy, although high, this is lower than last year’s 15% increase. The FRC said: ‘Taking account of the contributions from government and the FRC’s general reserves, we will increase the amount we request through the preparers levy towards the FRC’s annual funding requirement in 2024/25.’
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The FRC plans for the 2024/25 budget are out for consultation until 26 January 2024.