The interim head of the Financial Reporting Council has said there is a “grave risk” that the slow pace of appointing board members could result in delays to the watchdog’s reformation plans.
The Financial Reporting Council (FRC), which oversees the governance of the UK’s biggest listed companies, has been without a permanent chair since May last year when Simon Dingemans quit after eight months.
Keith Skeoch, the interim chair of the FRC, wrote that while plans to appoint a new chair and more non-executive were being made, “there is a grave risk, given recent experience, that these appointments will not be completed by the time myself and the other directors leave the board” in the watchdog’s annual report.
Skeoch is due to step down as chair, and as a director, in three months time.
In the report published last week he voiced fears that when he does so, in October, there could still be significant governance gaps on the watchdog’s board.
He warned that these gaps “may create delay in the important board reform and transformation process under way until such time as the recruitment process is completed.”
His comments referred to the transformation of the FRC into the Audit, Reporting and Governance Authority (ARGA).
It is expected that the new watchdog will have greater authority, including legal powers to force auditors and companies to resubmit their accounts without the need for court action.
Business Secretary Kwasi Kwarteng launched the White Paper, entitled ‘Restoring trust in audit and corporate governance’, in March to tackle plans to improve corporate governance.
He said at the time: “Restoring business confidence, but also people’s confidence in business, is crucial to repairing our economy and building back better from the pandemic.”
A complete transition to ARGA is not expected until 2023 because of legislation requirements.