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FRC levy plans

31 Dec 08

The Financial Reporting Council has announced new arrangements for funding its core operating activities in relation to accounting, auditing and corporate governance. The changes will come into effect from 1 April

The main change is to bring large private companies and public sector organisations within the scope of the FRC’s levy, in addition to its existing funding groups: publicly traded companies and the accountancy profession.

The government and the FRC believe that the latter’s costs should be met by the major groups which are subject, directly or indirectly, to its regulatory requirements. As a result, the government announced last February that, as a market led regulator, the FRC should in future be funded largely by market participants.

Commenting on the new funding arrangements, FRC chief executive Paul Boyle said: “These new arrangements will stabilise our funding for the future and enable us to play our part in promoting confidence in corporate reporting and governance. I am pleased that our consultation revealed substantial support for the approach we proposed.”

The changes will be phased in. For 2009/10, the FRC will apply the preparers’ levy to private companies with a turnover of £1bn or more. Thereafter, it will apply the levy to large private companies with a turnover of £500m or more.

The FRC has proposed to the government that for the purposes of the new arrangements it will assume that the government will substantially reduce its grant for 2009/10 and 2010/11.

The government has accepted that this is a reasonable planning assumption, but does not expect to formally confirm the level of its contribution until the first quarter of 2009.

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