FRC proposals recommend enhanced roles for audit committees

Audit committees should provide more detailed reports about business risks to shareholders, according to new proposals from the Financial Reporting Council (FRC), the UK governance watchdog.

This is one of seven recommendations aimed at improving dialogue between companies and their shareholders contained in an FRC report entitled, "Effective company stewardship: enhancing corporate reporting and audit".

The FRC also said that it wants companies to use the money saved through printing fewer annual reports to improve online access and transparency.

This sparked criticism from the UK Shareholders' Association, a private investor lobby group, which said it would fight any attempts to scrap printed annual reports.

Other key FRC recommendations include more detail from directors on how they ensure the reliability information used to make management decisions; a new section of the audit report assessing the completeness of the audit committee report; and more investor involvement in auditor appointments.

The FRC is seeking the views of investors, company directors and auditors on its proposals.

The deadline for stakeholder responses is the end of March.

Financial Management March 20