Risk & Economy » Regulation » FRC confirms 2015/2016 levy hike in response to new audit responsibilities

PREPARERS OF ACCOUNTS will need to dig deeper into their pockets to fund the reporting watchdog that oversees their work after the FRC confirmed it is hiking the amount sought through levy contributions for the coming year.

In its plan and budget for 2015/15 the FRC, which is currently investigating the auditing and accounting practices at Tesco, said the amount raised through its preparers levy would increase by 6.1%, although the minimum levy paid by smaller companies will be capped at 3.2%.

The levy payable by larger organisations will vary according to their market capitalisation or turnover, while the contribution from the accountancy professional bodies will increase by 2.5%, the FRC said.

The levy hike comes as the FRC takes on a new responsibilities associated with its audit work following EU and UK market reforms, which it is helping the government to implement. The implementation of the EU’s audit reforms broaden the scope of its audit work and will require the expansion of some FRC teams.

According to the FRC, its budget for core operating costs will increase by 6% to enable it to deliver its priorities and support the BIS in preparing for the implementation of the new EU Audit Directive and Regulation. The budget for audit quality reviews will increase by 12.5% in response to the Competition and Market Authority requirements. 

“We are therefore undertaking a thorough review of how we undertake much of our conduct work to ensure we are fit for this new future,” said FRC chief executive Stephen Haddrill.

In an interview with Financial Director, FRC chairman Sir Win Bischoff said the regulator would not require ‘a huge amount of funding’ to complete its audit work and that, in terms of its disciplinary work, it does not need to agitate or lobby for greater powers.

“On the audit side, I think we have the right powers – and it depends on the government as to what powers they want us to have,” he said.