Company number 02486368

From the period to 31 March 2026

Presented to Parliament by the Secretary of State for Business and Trade by Command of His Majesty

July 2026

This publication is available at www.gov.uk/official-documents. Any enquiries regarding this publication should be sent to us at

Financial Reporting Council Limited, 13th Floor, 1 Harbour Exchange Square, London, E14 9GE or frccommunications@frc.org.uk

ISBN 978-1-5286-6337-3 E03570234

07/25

Printed on paper containing 40% recycled fibre content minimum

Printed in the UK by HH Associates Ltd. on behalf of the Controller of His Majesty's Stationery Office

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95

FRC | Annual Report and Accounts 2025/26

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Observations from the pilot phase of the Actuarial Monitoring Programme issued

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Final report from the NHS Audit Market Study published

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Structured digital reporting – 2024/25 insights published

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Final report on the Company and Organisational Data Explorer project published

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Publication of the UK Stewardship Code 2026

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Annual audit firm inspection results

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Emerging findings from the Small and Medium Entities Audit Market Study

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Landmark guidance on the use of Artificial Intelligence (AI) in audit and thematic review

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Annual Enforcement Review published

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of certification of automated tools and techniques published

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Launch of Building Capacity for Smaller Firms programme

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Launch of the Innovation & Improvement Hub

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Annual Review of Corporate Reporting published

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Announcement of the appointment of Anthony Barrett as Executive Director of Supervision, and Penrose Foss as Executive Director of Investigations & Enforcement

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Key Facts & Trends report published

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Audit Quality Review key findings and good practice report published

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Withdrawal of Actuarial Statement of Recommended Practice 1 to streamline actuarial standards framework

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Publication of thematic review of reporting by the UK's smaller listed companies

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Annual Review of Corporate Governance Reporting published

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Issuance of International Standard on Sustainability Assurance (UK) 5000, General Requirements for Sustainability Assurance Engagements

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Publication of first reporting insights of the Wates Principles for large private companies

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Annual Audit

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Final list of successful signatories to the UK Stewardship Code 2020 published

Market & Competition Update published

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Guidance to support actuaries dealing with historic amendments to pension rules published

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SME audit market study final report and SME practice note issued

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Launch of our revised audit supervision approach

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AI guidance for audit firms on using generative and agentic AI tools in audit engagements published

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While this has been my last full year at the FRC, following my decision to retire as of September 2026, I am proud to be able to reflect on what has been achieved over the course of the last year, as well as what is to come.

We believe there is no contradiction between regulating to serve the public whilst simultaneously supporting economic growth. Our proportionate, business-as-usual work supports investor and stakeholder confidence, which, in combination with our change initiatives, further strengthen the FRC's position as a modern regulator.

Of course, we have demonstrated time and time again that the way we regulate has to support UK economic growth. We consider that responsibility to be two-fold through:

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Contributing to a regulatory environment that both supports the attractiveness of the UK's capital markets and enables well-run businesses to secure the investment they require to grow and scale.

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Our approach has changed significantly over the last decade, and we welcome the confidence shown by stakeholders in our plans. That said, we are not complacent and we recognise that we need to continue to evolve to ensure we remain fit for the future.

We were disappointed that Government was unable to take forward the audit and corporate governance reform bill, however, we welcome the commitment to put the FRC on a statutory footing when parliamentary time allows. This will give us the right legislative framework to support our effective, proportionate regulation, including securing sustainable funding and bringing us in line with other regulators. Nonetheless, the improvements we have already implemented demonstrate the value stakeholders place on maintaining the UK's well-earned position globally as a place with high standards of corporate behaviour. Maintaining trust and confidence in corporate governance, reporting and audit is precisely how we can support growth and serve the public interest.

Chair

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The FRC has an important purpose to serve the public interest and support UK economic growth by upholding high standards of corporate governance, corporate reporting, audit and actuarial work. The FRC's Board and executives remain focused on ensuring our current regulatory toolkit is used to best effect. This includes setting proportionate standards, fostering a culture of continuous improvement and holding those that fall short to account. This is important for all stakeholders who rely on trustworthy information to support financial decision-making.

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The standards and expectations we set will enhance corporate governance, corporate reporting

Our proportionate regulation of accounting, audit, assurance and actuarial work will expect and encourage
high quality by those responsible, acting as an improvement regulator and dealing effectively and fairly with cases where there are significant or serious shortcomings.

and investor stewardship in a manner that supports UK economic growth

and investment.

We will build on our deep understanding of corporate reporting and the audit and actuarial markets we oversee, and by being agile, we will identify and prepare for opportunities and challenges on
the horizon.

We will be a modern organisation, considered by others as a respected, effective and highly engaged regulator and by our colleagues as an inclusive and great place to work.

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Underpin investor confidence in UK plc.

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Reduce unnecessary burdens on business while maintaining high standards.

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Develop deep insight into the markets we oversee so our regulation is based on evidence and expertise.

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Identify future trends and innovations to support the health of the markets we oversee.

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Support the skills and resilience of the professions we regulate.

The FRC expects and encourages high standards, and our focus remains on audit quality and underpinning the trust and confidence of those who rely on corporate reporting.

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We will be a modern organisation, considered by others as a respected, effective and highly engaged regulator and by our colleagues as an inclusive and great place to work.

The UK's reputation for high standards of governance, corporate reporting and investor stewardship has been widely considered as a source of competitive advantage for international investment. The challenge for the FRC is to strike an appropriate balance between two things:

1.

Enhancing the quality of corporate information, which benefits users of this information as well as the preparers of this information if it offers them better access to capital to grow.

2.

Avoiding unnecessary burdens while doing so.

The updated UK Stewardship Code enhances investor stewardship and supports UK economic growth by maintaining a trusted, comparable reporting framework. We continue to embed the updated UK Corporate Governance Code including Provision 29, effective from January 2026, and maintain oversight of the Wates Principles for large private companies.

The FRC also maintains the accounting standards we set for the three million businesses that follow UK Generally Accepted Accounting Practice. Internationally, we continue to work with the International Auditing and Assurance Standards Board including the International Standard on Sustainability Assurance (ISSA) 5000 Task Force, leading on the development of the sustainability assurance standard and aligning global practice with UK priorities.

These strategic contributions are vital for maintaining consistency across jurisdictions for corporates that trade internationally, global audit firms and investors. They reinforce trust in audit quality worldwide and ensure UK leadership is shaping the future of corporate reporting and assurance.

The health of the UK economy needs to be underpinned by a robust and well-functioning audit market that is supported by appropriate levels of audit quality that instil trust and confidence in users of financial statements. This is a strong platform on which to build and is a shared vision with firms, professional bodies and investors.

Our Future of Audit Supervision Strategy (FASS) programme focused on evolving our supervision regulatory model, and has resulted in our revised supervisory approach, launched in March 2026 and effective immediately for the 2026/27 inspection cycle. The programme is built around a consistent, risk-based assessment, supported by graded inspections, targeted follow-up work, thematic reviews and corroboratory inspections. Our ongoing work on our enforcement processes (the end-to-end enforcement process review (E2E)) has looked at how we can introduce a more graduated and proportionate range of interventions to apply to the individual circumstances of each case.

Our SME Programme has improved our understanding of how the audit market operates for SMEs, resulting in clearer guidance on the proportionate and scalable application of International Standards on Auditing (ISAs). We have launched the FRC Innovation

& Improvement Hub to accelerate innovation, improve audit quality and strengthen market resilience. The Hub provides stakeholders with new, flexible ways to engage with regulatory support beyond traditional regulation, such as the 'Simplifying Annual Reporting' sandbox, with the first cohort running from October 2025 to March 2026.

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AI adoption in audit is accelerating, and our published guidance on AI has been recognised by stakeholders for its practical, clear and timely information, providing support to those working in this quickly developing space. In addition, the Company and Organisational Data Explorer (CODEx) project delivers public tools and infrastructure for data in corporate reporting, allowing users to access structured data better.

To replace multiple legacy systems with a unified back-office solution, we began work on our Enterprise Resource Planning (ERP) programme. This will automate tasks to increase efficiency and improve forecasting and decision-making through reliable and integrated flows of data. This improvement to our day-to-day operations will equip the FRC as a modern regulator with effective workflows and information management, in turn supporting security and internal controls. Similarly, we have further reduced our reliance on external database providers and introduced greater automation to our data gathering exercises.

The updated UK Stewardship Code 2026 was published in June 2025, following consultation and engagement with over 1,500 stakeholders. Reporting under the new Code is divided into two parts, the Policy & Context Disclosure, and the Activities & Outcomes Report, both serving as part of a distilled approach that maintains high standards while sharpening the focus on signatories' stewardship activities and their outcomes.

To support a smooth transition to the updated UK Stewardship Code, 2026 will be treated as a transition year. All existing signatories submitting a renewal application will remain on the signatory list throughout this period. This approach recognises that these organisations have already met the requirements to become a signatory of the 2020 Code and encourages them to embrace the updated, more flexible reporting framework without an immediate assessment of their reporting by the FRC.

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At the same time, we have been mindful that our role is not to prevent corporate failure, so ensuring our work supports responsible risk taking and reduces unnecessary burdens has also been key.

Our focus this year on corporate governance has been to engage significantly with companies listed in the commercial companies or closed-ended investment funds categories, which must apply the UK Corporate Governance Code. We also engaged with their representatives and advisers to ensure a smooth transition to the new arrangements for internal controls under the Code that became effective from 1 January 2026 (‘Provision 29'). I welcome the early feedback that the principles-based approach we adopted is leading to more valuable Board-level conversations about risk, without the cost of the more prescriptive and detailed approaches adopted in other jurisdictions.

We have been keen to ensure that the flexibility built into the foundation of the UK Corporate Governance Code is used by companies and respected by others, including investors and their proxy advisers. A cogent and transparent explanation to a Code provision should be seen as a sign of confidence in a Board's governance and a recognition that no two companies are identical. This flexibility in the Code is a key differentiator to the regimes that operate elsewhere like the US and EU and we believe if it is used well, the Code can be an asset for the UK's international competitiveness. On this theme of flexibility to meet individual circumstances, I was pleased that this year we also updated our guidance on non-executive remuneration to clarify that the Code does allow non-executive Board members to be paid in shares.

Our Investor Stewardship Code is often referred to as the ‘other side of the coin' to the UK Corporate Governance Code. For a voluntary code, it continues to be widely adopted and used by asset managers, asset owners, proxy advisers and other investor-based organisations. Signatories to the Stewardship Code as of January 2026 represent over

£57 trillion in assets under management. Following significant stakeholder engagement, we updated the Code this year to better focus on growth, streamline its requirements and reduce the reporting burden.

Audit plays a critical role in supporting trust and transparency, underpinning confidence in the financial statements. The quality of audit across the public interest entity (PIE) market has significantly improved since 2018; a time when the reputation of audit was damaged by several high-profile disorderly corporate failures where audit would have been expected to flag the heightened risk in advance. We cannot take this progress for granted or become complacent – audit quality requires constant vigilance and focus. New risks and

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opportunities are always arising and we still see some uncomfortable inconsistencies between audit firms and, on occasion, even within the same firm.

This year, the improvement in audit quality combined with new risks and opportunities on the horizon has led us to think about how our own regulatory approaches should change to ensure they remain effective and proportionate in the future.

In March 2026, we introduced a revised supervisory approach that places greater emphasis on assurance over firms' systems of quality management, alongside a reduced reliance on individual file inspection scores. We believe this approach is more suited to embedding continuous learning and improvement within the sector and gives us a holistic view of

a firm's approach and commitment to delivering audit quality.

We also launched an important consultation on our approach to enforcement, where we have a role to hold to account those whose work contains serious or significant failures. Although the overall number of cases that are investigated remains low compared to the number of statutory PIE audits undertaken each year, we developed some significant

proposals for change – including a broader suite of routes to resolution, rather than relying solely on the current investigation model.

Ensuring that we remained abreast of audit market developments was also a key feature in our work this year. For example, we spent a substantial amount of time working with firms and investors to ensure regulatory expectations were understood when private capital was being used to acquire an interest in an audit firm. We issued guidance for auditors on the use of AI. We also supported the audit industry's ability to trade freely and enhance its pipeline of talent by continuing our work with international partners on the mutual recognition of statutory auditors, with encouraging discussions ongoing with several strategic partners around the world.

in a pragmatic way that contributes to UK economic growth. I am deeply grateful for the support and wise counsel he has given to me and to the organisation, so I want to take this opportunity to express my sincere thanks.

Chief Executive Officer (CEO)

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Our work continues to foster a regulatory environment that supports growth in the UK by strengthening investor confidence through high-quality audits of well-prepared accounts and transparent reporting. This enables well-run companies to access the capital they need to grow and create jobs. We help to maintain trust and confidence in the information produced by companies and used by a range of stakeholders, including investors, creditors, and employees, as well as the communities in which they operate. This in turn enables companies to secure capital and the broader support they need to grow and prosper

in the long term, as well as supporting capital markets to work effectively.

In recognition of the continued importance of sustainability to our stakeholders and the wider ecosystem, in May 2025 we proposed the introduction of the UK version of ISSA 5000 to promote use among UK assurance practitioners to ensure consistent, quality, sustainability assurance engagements across the UK markets. The final version of the standard, issued for use on a voluntary basis, will contribute to greater international alignment of sustainability assurance engagements.

We have continued to focus on the Codes we oversee, with an extensive programme of engagement in place to ensure that stakeholders are confident in how to approach and implement them. Comply or explain remains a key part of the flexibility and we have been encouraging company boards to think for themselves when considering whether compliance is right for them, or whether explanation better suits their business model. As part of this work, we issued renewed comply or explain guidance in March, and have worked on areas such as non-executive remuneration to support good governance.

As discussed in our business model (see page 10), we have had significant engagement on two major projects, E2E and FASS. On E2E, we are committed to ensuring that our regulatory approach means that firms know what to expect in their engagement with our investigations and enforcement activity, and the quality of co-operation required of them. In March 2026, we announced the culmination of our FASS work via the implementation of our revised supervisory approach starting with the largest firms in April 2026, with further developments piloted during 2026/27.

We remain committed to working with all of our stakeholders to support the Government's ambition to reduce administrative burdens for business. We look for opportunities to ensure our work is as proportionate and effective as possible to remove unnecessary reporting or regulatory burden.

We have continued to review some areas of our work on an annual basis to ensure the standards we set remain proportionate and fit for purpose. In May 2026, following its annual review cycle, we issued amendments to 'Financial Reporting Standard (FRS) 101 - Reduced Disclosure Framework' which provide an optional framework for cost-effective financial reporting within groups. This enables entities to take advantage of reporting exemptions, while still meeting the information needs of users of their reporting.

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Our work continues in audit, ethics and corporate reporting to ensure better alignment with international standards and to reduce additional costs for UK businesses in a proportionate way. In October, we issued our consultation on proposed revisions to ISA (UK) 240 and (UK) 570. These two revised ISAs were published in March 2026 and align with recent revisions to equivalent international counterparts, designed to preserve the UK's position in global financial markets.

In April 2025, we introduced a quarterly consultation schedule, intended to deliver greater consistency and provide clarity for stakeholders, making it easier for interested parties

to anticipate, prepare for and respond to regulatory developments. Alongside this, we continue to contribute to the Regulatory Initiatives Grid from the Financial Services Regulatory Initiatives Forum, so stakeholders can see how our work aligns and coincides with that of other regulators.

In the last year, we have taken significant steps in our actuarial work including publishing an updated version of the Technical Actuarial Standard (TAS) 300 in July, which removed provisions that are no longer needed and provided greater clarity to practitioners. We also issued proportionality guidance for actuaries in October to support the application of the principles-based standards in a proportionate and outcome-driven way. We withdrew Actuarial Statement of Recommended Practice (ASORP) 1 as it was no longer required following the most recent revisions to TAS 100.

In January 2026, we issued guidance to help pension scheme actuaries provide retrospective confirmation to validate historic changes to pension scheme rules. This work required close collaboration with industry, including extensive input from the Institute and Faculty

of Actuaries and the Association of Consulting Actuaries.

The guidance recognised concerns raised across the pensions industry. It provides clear, practical help on how to work proportionately when reviewing historic scheme changes to support sound judgement and strengthen confidence that pension schemes have complied with their legal obligations.

In March 2026, we hosted a webinar to explain how the guidance was developed and how actuaries can apply it in a proportionate, evidence-based way that aligns with the Technical Actuarial Standards.

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As identified in our objectives, we consider it crucial to our work that we have a deep understanding of the audit and actuarial markets we oversee. One significant piece of work in relation to this has been our SME audit market study, which concluded in March with the announcement of a package of measures to make audits more proportionate and efficient for SMEs, helping to support their growth and access to capital. As part of this, we have committed to:

•

Publish new guidance to support auditors to apply auditing standards in a way that is relative to the complexity and size of the business.

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Launch a new programme of engagement with auditors of SMEs to support their understanding of the new guidance.

•

•

Establish a new working group with the Recognised Supervisory Bodies (RSBs) to promote more consistency in how audits of SMEs are supervised.

•

Engage with stakeholders on the international Less Complex Entities auditing standard, providing UK stakeholders with the opportunity to influence its future development.

This work recognises that SMEs are a cornerstone of the UK economy, driving innovation, creating jobs and powering growth, so it sits within our wider work to reduce burdens

on businesses and support economic growth. During the study, we engaged with over 500 stakeholders, including SMEs, capital providers and auditors, to better understand how the audit market is working in practice and where improvements can be made. We also engaged with RSB audit inspectors and third party methodology providers to ensure that the remedies we were considering would meet their needs too. We saw that auditors sometimes lack confidence to use the scalability provisions in standards and the published Practice Note will support them to do so.

We conduct a number of annual reviews throughout the year relating to various parts of our work to help us and our stakeholders better understand how the market is working and to consider the best approach to our regulation. Our annual review of corporate reporting, published in September, showed that the quality of corporate reporting across FTSE 350 companies had been maintained across the 2024/25 monitoring cycle. We saw that a lower proportion of our reviews resulted in queries being raised with companies compared with previous years, with the overall number of restatements also falling.

Our review of corporate governance reporting, issued in November, analysed reporting trends and practices among 100 UK-listed companies against the 2018 UK Corporate Governance Code. It highlighted examples of good practice such as comprehensive explanations that outline company rationale, and described alternative governance arrangements in place. In December, we published our first reporting insights from

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Our annual review of audit quality, covering the inspection and supervision results of audit firms across the PIE market, called for all stakeholders in the UK audit landscape to work together to deliver a thriving market and profession working in the public interest. Finally, our annual enforcement review illustrates our expectations by referring to specific themes and case studies, allowing us to communicate this to our stakeholders. This year's report included spotlights covering the Ethical Standard, management challenge and sufficient appropriate audit evidence.

These reviews are consistently well received by our stakeholders and allow us to develop the deep understanding of the market we need to ensure our regulation is fit for purpose.

Our work continues to advance and support innovation, quality and market resilience to increase regulatory certainty for our stakeholders and promote outcomes-based regulation. We recognise the fast development of technology and AI in the sector and more widely, so this is considered in our work.

We have continued to work with our regulatory partners to drive up the quality of digital reporting, building on our discussion paper to further develop our taxonomies and digital reporting. Our review of structured digital reporting in April 2025 highlighted key improvement areas for how UK-listed companies present their digital annual reports.

Our final report of our CODEx project summarised the work we have done alongside the Financial Conduct Authority (FCA), Companies House, The Charity Commission and HMRC, to find innovative and cost-effective ways of accessing and using structured accounting and reporting data in the UK.

Our feedback statement on opportunities for future UK digital reporting, published in May 2025, demonstrated the stakeholder support for digital reporting and the need for a collaborative approach to address the challenges the sector will face in the next phase of digital reporting. In support of our work in this space, we hosted a series of outreach events and associated hackathons beginning in March 2026, which supported improved understanding of digital reporting using XBRL and the UK taxonomies.

While the FRC has statutory responsibilities with regards to RSBs, we believe that we also have a role in supporting the skills and resilience of the professions we regulate. In

recognition of this, we seek to provide the support and guidance necessary to ensure the professions we regulate are able to understand, use and implement the regulations we set.

In September, we launched our Building Capacity and Capability for Smaller Firms initiative, which introduced a more proportionate supervisory approach, designed to enhance

audit quality and reflect the unique needs of smaller firms. Smaller UK PIE audit firms were invited to participate in a new workstream on the FRC's Audit Firm Scalebox, the ‘Scalebox-SoQM'. Those firms that accepted this invitation and committed to investing and developing their Systems of Quality Management (SoQM) are subject to reduced formal inspection, supervision and registration requirements during 2026 and 2027 to allow them space and time to develop and grow. This complements broader developments in our supervisory approach as addressed through the FASS project.

Fourteen investigations were concluded in the 12 months to 31 March 2026. The publication of outcomes are intended to be educative and we have set financial and non-financial sanctions tailored to reflect the issues identified in the matters investigated, which are aimed at promoting transparency and accountability, and maintaining professional standards.

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Over the course of the last year, we have also created a number of factsheets, mythbusters and Q&As, such as ‘What is an audit?', the factsheet for FRS 102 preparers, our Provision 29 mythbuster and the UK Stewardship Code 2026 factsheet. We also issued podcasts to support stakeholders to better understand our work, which last year included our summer series on corporate governance.

AI is transforming the world around us, and the FRC can benefit from the use of these technologies to deliver against our objectives. We are supportive of the use of AI tools with appropriate risk management, both externally and internally, and our three-year strategy focuses on AI and technology as a priority area for us to address as a modern and agile regulator.

In June 2025, we published our AI in audit guidance, outlining a coherent approach to implementing a hypothetical AI-enabled tool and offering insights into FRC documentation requirements, all designed to support innovation. This was followed by our Generative and Agentic AI  guidance, issued in March 2026. This discusses audit quality risks associated with generative and agentic AI tools, alongside possible mitigations and principles for exercising professional judgement when seeking to obtain appropriate confidence in the outputs of these tools.

Following the launch of our Innovation & Improvement Hub in September 2025, we will look to tackle challenges around responsible use of AI through future sandboxes and other initiatives, including how AI might affect the future of audit. This is part of our commitment to identify and act on future trends and innovations to support the health of the markets we oversee.

Internally, teams are considering ways that AI can support their work. The Corporate Governance and Stewardship team has been testing the use of an AI tool to assist with evidence-gathering for its reviews of reporting, work previously undertaken through a time-consuming manual tagging process. By improving efficiency at this stage, the AI tool has allowed the team to focus more of its time on reviewing reporting quality and exercising professional judgement. Similarly, the Actuarial Regulation team is testing the tool to collate, analyse and summarise consultation responses in parallel with non-AI methods to assess accuracy and develop our capabilities to deploy the technology in future consultations.

We are also ensuring that our work complies with the Public Sector Bodies (Websites and Mobile Applications) (No.2) Accessibility Regulations 2018, using AI to produce HTML versions of some publications to promote accessibility for screen readers on

our website.

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In measuring our performance, a series of targets are agreed and monitored during the year. The FRC's Executive Committee (ExCo) regularly receives detailed management information that underpins each of the published Operational Performance Measures (OPMs). Our 2025/26 performance against some of the key measures is shown below, together with performance from the previous year.

140-150

140

141

Number of Audit Quality Review inspections completed

240-260

248

222

Number of Corporate Reporting Review (CRR) reports completed

98%

100%

100%

Complaints against professional bodies for auditors, accountants and actuaries investigated and responded to within six weeks

100%

100%

98%

PIE auditor registration applications which do not raise any compliance issues will be processed, and a decision taken, within 25 working days of the date on which all required documentation and information has been submitted to the FRC

50%

50%

90%

Enforcement cases concluded, settled, or closed within

two-year target2

80%

100%

87%

Enforcement cases concluded, settled, or closed within

three-year target2

£61.4m

£58.0m5

£63.4m

Operating costs against budget (excluding UK Endorsement Board (UKEB) cost and case cost)

480

457

459

Recruitment (staff) against budget3 4

98%

100%

100%

FRC complaints responded to within service level agreement timeframe

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1

2

•

•

A period of three years between the notification of the commencement of investigation and service of either the Proposed Formal Complaint, Investigation Report (or closure or settlement if sooner) in 80% of cases in a financial reporting period (1 April to 31 March).

3

This number is the maximum headcount expected for the year and so is considered on target if the total number of employees remains below this.

4

This headcount figure excludes cover for maternity leave, shared parental leave, or sickness absence.

5

This figure is derived from total operating costs after the deduction of UKEB specific cost (£5.1m) and case cost (£2.5m), subject to rounding.

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Our work relies on experts and professionals to guide and develop the evolution of the sectors we regulate or oversee as a modern regulator. We have developed our People Strategy to ensure we recruit, retain and develop the necessary skills, experience and values to meet our objectives. Fostering diversity, advancing equity and cultivating inclusion are essential to being an organisation considered by our colleagues as an inclusive and great place to work.

Our Birmingham office now accounts for 14.2% of our overall workforce, with two members of ExCo based there. March 2026 marked a year in our Harbour Exchange office in London, providing modern facilities that support flexible and collaborative ways of working. Our hybrid working programme remains in place across the organisation with the expectation of 40% office attendance for all colleagues. This allows our people to combine the benefits of working from home with time in the office, enabling collaboration no matter where we are working.

We conduct an annual People Survey, inviting all colleagues to share their anonymous views to help develop and improve the way the FRC works, as well as identify key issues, priorities for improvement, and areas of success and good practice. Feedback from the survey is considered by the People Committee and ExCo. Following our 2024/25 People Survey, our actions focused on three organisation-wide programmes:

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Joined-up working.

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Learning and development.

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Continuing to embed our values and behaviours.

The 2025/26 survey saw improved scores across all three of these areas, and each of these remained a key part of our people plans for the year, as well as an additional focus on speaking up and wellbeing.

Our people remain at the heart of how we deliver high-quality, forward-looking regulation. This year, our people networks have continued to play an important role in shaping an inclusive culture. These employee-led groups have continued to grow and mature, and comprise nine networks related to areas of Diversity, Equity and Inclusion (DEI), four faith groups and ten informal social groups. Each offers space for discussion, peer support and shared learning, and collectively they contribute to a culture where colleagues feel heard, represented and empowered.

We bring together colleagues from our London and Birmingham offices through our monthly town halls, held in a hybrid format, as well as at divisional and team-level meetings. Our town halls provide a regular opportunity for colleagues to hear directly from senior leaders, including a business update from the CEO, learning about ongoing regulatory and organisational priorities, and gaining a better understanding of the work of teams across the organisation. There is good attendance each month and this has remained consistent throughout this year. Sessions are also recorded, so those who

are unable to attend can watch back. Colleagues are encouraged to actively participate through live Q&A and anonymous pre-submissions, supporting open dialogue and ensuring that communication remains responsive to our people's needs.

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All FRC staff are entitled to two days' paid volunteering or Corporate Social Responsibility leave per year. Over the course of the last year, colleagues across the FRC have used 1,149 volunteering hours, equating to 164 days. Ten organisations, including local schools, have benefitted.

We provide a healthy and safe working environment for all of our colleagues and visitors. We have a dedicated team of fire marshals, first aiders and mental health first aiders to support colleagues and record any incidents. Per employee, the average working days lost to absence for the 12 months to March 2026 was 5.3 days (2025: 5.7 days).

We continue to allocate six days per year for each employee's learning and development activities, with the potential for more with the agreement of an individual's manager. We provide a wide range of learning and development activities, from mandatory and technical training to support continuous knowledge and professional development, to internal and external programmes to develop leadership skills.

Of 457 employees, 296 are members of professional bodies and 19 are working towards professional qualifications.

Over the last year, attrition has remained low with a voluntary turnover of 7% and an involuntary turnover of 1.8%. We have had 18 people return from parental leave. Of the 76 vacancies filled in 2025/26, 42 were internal appointments, demonstrating our commitment to providing opportunities for our people to develop their careers.

We continue to invest in colleague development through our people-centred leadership programmes. The Empower Programme supports level 1 and 2 employees to develop core skills such as communication and presentation, building networks and community, and career planning. Over the course of six months, participants receive one-to-one coaching sessions and workshop.

Our Leadership Fundamentals Programme supports colleagues at levels 3 and 4, providing core leadership knowledge and practical tools to support progression into more senior roles. Together, these programmes help to support colleagues at every stage of their career.

We recognise that a diverse and inclusive workplace is not only the right thing to do, but is also essential for driving innovation, employee engagement, better decision-making and improved outcomes. Our DE&I strategy for 2025/27 reflects this and reaffirms our commitment to embedding these values in everything we do at the FRC.

Our DE&I Committee coordinates and champions the various networks that exist across the organisation, and ensures alignment of these groups with the DE&I strategy. The FRC is Menopause Friendly, Disability Confident, and a signatory to the HM Treasury Women in Finance charter.

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We are proud to be a signatory to the Government's Disability Confident Scheme, which guarantees an interview to disabled applicants who meet the minimum criteria for any job vacancy. We also partner with the Business Disability Forum and are accredited as a Level 2 Disability Confident Employer, reflecting our commitment to removing barriers for disabled people across recruitment, retention and talent development. For more information, visit our careers page.

As part of our ongoing commitment to support talent development, social mobility and early careers at the FRC, we offer initiatives including our work experience programme, promote external mentoring opportunities and organise career insight visits with the East London Business Alliance.

This year, the FRC launched a revised performance evaluation process. This provides a framework for aligning our individual objectives, performance and development with organisational goals to ensure optimised performance.

Following broad consultation, briefings and training for employees and managers, the change has

seen five differentiated levels of performance, rather than the previous three, and the addition of a ‘performance gateway'. This provides a more

robust process that supports the provision of both good developmental feedback and recognition

of outstanding performance by individuals. The gateway introduced a set of minimum expectations for colleagues, including consideration of our values and behaviours, completion of mandatory training, and meeting our hybrid working expectations.

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Section 172 of the Companies Act 2006 (the Act) requires directors to consider the interests of stakeholders in their decision-making. In particular, section 172 (1) states that regard should be had to:

•

The long-term consequences of decisions.

•

The interests of the company's employees.

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The need to foster the company's business relationships with suppliers, customers and others.

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The impact of the company's operations on the community and the environment.

•

The desirability of the company maintaining a reputation for high standards of business conduct.

Our direct stakeholders include companies, institutional investors, auditors, actuaries, accountants, their respective professional bodies, regulators and the Government.

Our indirect stakeholders include retail shareholders, suppliers, employees, customers, communities, pension holders and savers, and financial institutions. All of our stakeholders have an interest in the health of companies and other organisations within our existing and future regulatory scope, and in the success of the UK corporate sector as a whole.

The directors are fully aware of their responsibilities to promote the success of the company in accordance with section 172. Consideration of stakeholders' interests has always been integral to our work and decision-making. Our Stakeholder Engagement & Corporate Affairs team continues to deliver high-quality engagement with our stakeholders and increase the reach, engagement and targeting of our communications and activity.

We engage with our stakeholders by focusing on:

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Creating a network of advocates.

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Soliciting senior-level input.

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Positioning the FRC as a leader in key debates on topics where we have regulatory remit or interest.

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Gathering input into policymaking and consultations.

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Driving awareness and engagement with our Codes and good practice.

•

Ensuring that the FRC is a part of relevant decision-making bodies and groups.

The Board and ExCo received regular briefings on stakeholder engagement, insights and risk and reputation management during the year. The Board carefully considers the impact of its decisions on stakeholder groups and the directors acknowledge that, as an independent regulator with a public interest remit, its decisions will not always be supported by all stakeholders. Major policy issues are subject to consultation and responses are carefully considered to inform decision-making, with due process on consultations relating to matters of public interest. Feedback statements are issued

following consideration of consultation responses, and these are published on our website.

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For example, feedback received through consultation on the proposed revisions to the UK Stewardship Code was discussed by the Board and led to changes to the final proposals to improve clarity, proportionality and usability for signatories. Similarly, stakeholder engagement informed the Board's consideration of the FRC's Plan and Budget. Views

expressed by stakeholders on regulatory priorities were reflected in decisions on proposed activities, sequencing and resource allocation for the coming year.

We periodically survey our stakeholder universe to understand and consider their perceptions of our work, communications and engagement, and our reputation as we take forward our regulatory activities. In 2025/26, we conducted a stakeholder perceptions survey to support our work in delivering our strategic objectives as set out in our three-year strategy. By ensuring that stakeholders' perceptions of our work reflects our intentions, we are better able to plan and adapt our approach to support stakeholder needs. The survey also helped us to understand how stakeholders perceive us in the context of the wider political, regulatory and business environment.

The Board has a process in place for decision-making, taking into account the FRC's strategic objectives, culture and values to ensure it has confidence in the decisions it makes. Our board paper templates and the information provided to the Board reflect the likely long-term impacts on our stakeholders, setting out the relevant issues and how they have been considered during discussions.

The Board also works to ensure that its decisions are consistent. Regular updates are provided to the Board on key actions that have been undertaken. When making

key decisions, the directors also have regard to the need to foster the FRC's business relationship with suppliers, customers and all other stakeholders in our supply chain.

The success of the FRC is dependent on strong engagement with all of our stakeholders, and we recognise their valuable contribution to our work. Some particular highlights from this year include:

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Extensive engagement with stakeholders on our FASS and E2E projects to ensure that our work is robust, transparent and effective, while also proportionate and able to meet the expectations of the modern regulatory landscape.

•

The start of 15 consultations across audit, corporate reporting, actuarial and accounting policy areas with webinars and roundtables used to engage with stakeholders and encourage them to participate.

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Approval and publication of the 2026/27 Plan and Budget following consultation with stakeholders.

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A Board strategy day to review delivery against strategic objectives, and to manage and understand our stakeholders' interests. We also ran an event for the FRC's non-executive advisers to update them on current and ongoing developments.

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Engagement with stakeholders in relation to the transition to the UK Stewardship Code 2026, and Provision 29 of the Corporate Governance Code, both effective from 1 January 2026.

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The Board regularly engages with employees and the wider workforce through the People Forum, as well as the annual People Survey to identify key issues and priorities for improvement.

To support the FRC to fulfil its purpose, the Stakeholder Insight Group (SIG), founded in 2022, provides valuable input, external perspectives and diversity of thought to help guide the FRC's strategy and activities.

Membership of the SIG brings together stakeholders from across industry and the wider ecosystem, including investors, professional bodies, business representatives, legal firms, public interest groups and those with a demonstrable interest in reporting, audit and corporate governance.

The SIG and its members are expected to share their perspectives on:

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Key opportunities and potential areas of focus for the FRC.

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Key areas of concern and emerging risks relating to accounting, reporting, auditing, actuarial and governance issues.

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Market developments and feed back key narratives from their own sectors.

Over the last year, the SIG has discussed topics such as:

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our strategic outlook, with horizon scanning on areas or subjects to consider prioritising for the year ahead;

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stakeholder responses to major FRC projects, with input into our forward planning for FASS and E2E and review of the new Stewardship Code;

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and developments in corporate reporting and sustainability.

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p31

p28

p31

p22

p22

p32

Our current assessment, within our overall risk framework, is that we as an organisation are not significantly exposed to the physical risks of climate change in the short and medium term, and that climate change does not represent a specific threat to our viability or ability to operate. We do, however, take account of the potential impact

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Scope 1 consumption (kWh)*

Natural gas

Scope 2 consumption (kWh)*

Scope 1 emissions (tCO2e)

Scope 2 emissions (tCO2e)

*Based on energy consumption data provided by our landlord in our London office. It was not practical to include actual Quarter 4 data as this was not available, hence estimates were used based on Quarter 3 data provided by our landlord.

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We collect data on IT waste, single-use plastics, paper and business travel, which we provide to Government as part of the Greening Government Commitments. By collecting this data, we are able to identify and promote positive trends in our consumption and waste.

Paper consumption (A4 reams equivalent)

Single-use plastic consumption (no. of items)

Business travel (km)

Our paper use significantly decreased by 20% from last year's consumption, reflecting progress on sustainability and efficiency. As we transition to GovPrint, we hope to improve our sustainability measures by reducing unnecessary printing and waste. Our people

are reminded of the need to print only if necessary. Our single-use plastic consumption count also recorded a significant 39% decrease from the previous year. We recognise the environmental impact associated with single-use plastics and are committed to minimising their use across our operations. We also continue to consider non-plastic alternatives to consumables in our kitchens.

All FRC business travel complies with our travel policy, which requires our people to consider the environmental impact of their travel before making arrangements. Increased rail travel between our dual locations in London and Birmingham accounts for the majority of the increase in business travel this year. Total air travel has declined year-on-year, contributing to a reduced environmental impact.

In line with our policy on the disposal of IT equipment, we have a responsibility under several UK/EU directives, including the Landfill Directive, the Waste Electronic & Electrical Equipment Directive and the Hazardous Waste Directive, to ensure that final disposal of all waste electronic and electrical equipment is responsible and traceable. We engage an external contractor to manage the disposal of any IT equipment, identifying items to sell, refurbish, recycle or send to landfill. We also partner with a specialist recycling company, which collects and recycles toner cartridges under strict, environmentally responsible standards.

We continue to have separate bins for food waste, recyclables (including metals, plastics and paper) and non-recyclable waste for collection by building waste managers, in line with legislation.

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Information and data loss is recognised as one of the FRC's principal risks and, as such, is included on the Principal Risk Register. ExCo and the Board, supported by the Audit & Risk Committee, keep these risks and controls in place to mitigate those risks under review on a regular basis. We keep a separate Record of Processing Activities and an Information Asset Register.

We operate an internal Information Governance Group (IGG) that meets quarterly to review, assess and improve operational oversight and coordination of information governance and controls. The remit of the IGG allows it to support our people's engagement with, and commitment to, information handling. It also identifies areas of concern at an early stage for escalation to ExCo or the Audit & Risk Committee, if appropriate.

We understand the importance of privacy and maintaining trust and confidence in our data handling processes. Our Legal Services team maintains our privacy and data retention

policies and procedures, working closely with the Data Protection Officer. The Legal Services team also oversees responses to all General Data Protection Regulation (GDPR) and Freedom of Information Act (FOIA) requests, and compliance with applicable legislation, including UK GDPR. All FRC employees and Board members have received mandatory training on relevant aspects of UK GDPR, online security risks and FOIA. Through our processes and procedures, we are able to provide assurance that personal data is handled and processed in line with the seven UK GDPR principles. Information on our privacy policies can be found on our website.

We ensure we have an up-to-date IT architecture in place to defend the FRC against data security and loss threats that may occur when colleagues work in the office or at home. Our IT team takes a layered approach to defending the systems of the organisation,

employing several technologies to protect the estate. The team constantly reviews the threat landscape and the cybersecurity market for new tools and systems. Our Procurement team also ensures we follow compliance when contracts are up for renewal. During 2025/26, 19 data incidents were reported internally. None of these were reportable to the Information Commissioner's Office.

Increasing use of AI across the sector has the potential to positively impact the way that we deliver our functions. However, any AI systems we use must be safe, secure and designed to prevent harm to individuals, organisations and the market and sectors.

Any and all AI-generated content must be checked and validated by the individual using it. Any future potential use of AI must be formally approved by the FRC.

All FRC employees and non-executives must comply with The FRC Code of Conduct and make up-to-date, full disclosures regarding their external interests and any gifts and hospitality received, to ensure that our work remains free from bias. New joiners must disclose their relevant interests prior to signing their contract. Colleagues are not permitted to take part in work relating to an entity they have worked for in the last three years, unless an exemption request has been viewed and approved by a member of ExCo. Our people are also required to have no conflicts of interest when exercising regulatory functions. In accordance with the policy, the People Committee regularly reviews disclosures made by Board members, ExCo and Senior Advisers. A Register of Interests is published on our website.

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In accordance with policy, the People Committee regularly reviews disclosures made by Board members and ExCo. The Gift and Hospitality Register is published quarterly on our website. ExCo also reviews all colleague disclosures on a quarterly basis. The Gifts and Hospitality and Conflicts of Interest policies were reviewed and updated during the year, and all colleagues were enrolled to complete online training modules to support their knowledge in this area.

During 2025/26, the FRC recorded no cases of bribery. UK legislation on bribery applies to the FRC, its employees and members of the governance structure. The FRC Code of

Conduct, which colleagues and members of the governance structure must follow, sets out that all colleagues must not bribe another person (including offering, promising or giving a financial or other advantage), accept a bribe (including requesting, agreeing to receive, or accepting a financial or other advantage), or facilitate or condone an act of bribery.

The FRC undertook a review of its fraud prevention policies and procedures in readiness for the new ‘failure to prevent fraud' offence that is coming into force under section 199 of the Economic Crime and Corporate Transparency Act 2023. The updated policy framework reflects the FRC's continued commitment to preventing fraud and upholding the highest standards of integrity.

The FRC maintains its own whistleblowing mechanisms and internal investigation procedures, which are reviewed annually by the Audit & Risk Committee. The FRC's central complaints function conducts internal reviews into any external complaints received about the FRC itself. An Independent Complaints Reviewer may be appointed to review our processes should a complainant have any outstanding concerns.

During 2025/26, the FRC suffered no monetary losses as a result of legal proceedings associated with our professional integrity, which would include negligence of duty, malpractice, breach of contract, fraud, corruption or bribery.

The FRC Board annually reviews our Modern Slavery Statement. The FRC does not condone any activity that constitutes modern slavery or human trafficking under the Act. Our suppliers (and supply chain) should maintain the same approach, and we have policies and procedures in place to minimise the risk of modern slavery occurring. Our Modern Slavery Statement is available to view on our website.

The FRC complies with the public sector procurement rules as stipulated in the Public Contracts Regulations 2015. The FRC's supplier relationships seek to deliver successful, sustainable solutions. New and existing suppliers must continuously align their approach, processes and procedures to the core principles relating to minimising risk and compliance with regulations and legislation. In addition, suppliers should strive for good practice relating to information security, financial management and business continuity. It is FRC policy to pay suppliers when or before payments become due, and we endeavour

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to pay suppliers within 21 days of the date of invoice (achieved in 2025/26: 11 days). As part of the accountability report, we confirm that there are no remote contingent liabilities to report, no loss or special payments made, no gifts made over the prescribed limit in Managing Public Money, and fees and charges are not material.

In accordance with Managing Public Money, we are required to provide information on certain matters including losses and special payments, gifts, remote contingent liabilities, and fees and charges. Information on fees and charges has been provided in the Financial Review, and we confirm there are no other matters to report. Our proactive commitment to the responsible management of public money continues to guide everything we do.

During the financial year, we delivered a refresher training course for all budget holders and colleagues with delegated financial authority, reinforcing their responsibilities in safeguarding public funds. We also enhanced our organisational defences by further reinforcing our fraud prevention measures, including delivering fraud prevention training to all our people.

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The FRC reviews complaints and referrals received from the public in line with its role in encouraging confidence in the integrity of accountants, actuaries, auditing and corporate reporting. The majority of the complaints we receive that are within our remit concern regulated activities. A small number of complaints are also received about the FRC.

Many complaints we receive are outside of our remit; these are passed on to the relevant authorities or bodies that may be able to assist wherever possible.

The FRC has a centralised complaints function to triage complaints and ensure they are handled, responded to and resolved appropriately, promptly and consistently. In the course of the year, we undertook continuous improvement reviews of all policies, procedures

and processes to ensure that they continue to adapt to the changing needs of both the organisation and complainants, and incorporate good practice.

Following receipt, complaints are triaged to determine whether they fall within our remit and, if they do, they are then referred for consideration to one of the below teams:

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Corporate Reporting Review: responsible for reviewing accounts of listed, UK Alternative Investment Market (AIM)-quoted, and large private companies, as well as limited liability partnerships, to determine whether they have complied with relevant accounting and reporting requirements, as set out in the Companies Act 2006.

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Case Assessment: responsible for identifying cases that may fall within the remit of one or more of the FRC's disciplinary or enforcement procedures. This includes the Audit Enforcement Procedure (AEP) in relation to suspected breach by statutory auditors

of Relevant Requirements and the Accountancy and Actuarial Schemes, in relation to suspected professional misconduct by members of the chartered accountancy and actuarial bodies in public interest cases. Case Assessment refers to the FRC's Conduct Committee for a decision as to whether to open an investigation by the Enforcement Division under the applicable procedure.

•

Professional Bodies Supervision: responsible for providing independent oversight of the professional audit, accountancy and actuarial bodies, and considering the way a body has handled a complaint made to it.

Our published policies and complaints forms include clear guidance on how complaints will be dealt with, including timelines.

We received 658 complaints during 2025/26, summarised below:

Brought forward (within remit)

Incoming complaints

Outside remit

Closed/resolved complaints (within remit)

Carried forward (within remit)

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The types of complaint received are broken down below:

Conduct or performance of accountant (regulated)

Conduct or performance of accountant (unregulated)

Conduct or performance of accountant (unknown)

Conduct or performance of auditor

Financial reporting

Actuarial work

Actions of a professional body

Insolvency issue

Other/unknown

FRC

The handling timescales across all cases closed in 2025/26 were an average of 1.5 working days to send an acknowledgement and an average of 3.9 working days for the outcome. This includes cases of whistleblowing.

During the year, 65 complaints were received related to corporate reporting matters and were referred to CRR. 25 of these related to matters or entities that were not within our scope. After careful consideration, 18 were deemed of insufficient merit to pursue. The remaining 22 complaints were pursued.

Open

Improvements secured – notes or/and narrative

No breach

Open

The complaints came from a diverse range of parties including private individuals and investors, and related to companies ranging from private and small AIM to FTSE 100. Consistent with our usual practice, and subject to any relevant confidentiality restrictions, information relating to some complaints was shared with, or referred to, other relevant authorities including the FCA.

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At the beginning of the year, there were 14 open cases relating to complaints about corporate reporting matters received in earlier years. A total of 11 of these cases have now been closed, three are still open. The actions taken during 2025/26 in relation to these complaints are illustrated below.

Entity or matter not in scope

Insufficient merit

Improvements secured – notes or/and narrative

Improvements secured – primary financial statement restated

Open

No breach

Open

Case Assessment opened 15 complaint enquiries this year. One complaint was received in relation to a matter for which Case Assessment had an existing enquiry open. 11 complaint enquiries (eight of which were in relation to audit) were closed by the team as our enquiries found that there was no basis or information to support the complaint.

Professional Bodies Supervision (PBS) received 72 complaints about the professional audit, accountancy and actuarial bodies that we supervise. Two complaints were brought forward from the previous year. Of those 74 complaints, the team conducted a full review of the professional bodies' relevant process in 16 of these cases. Ten complaints remain open as of 31 March 2026.

Further information on complaints received by PBS, including trends, can be found in our report on our professional bodies supervision responsibilities for 2025/26, due to be published later this year.

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Whistleblowing is the term used when a worker passes on information concerning suspected or known wrongdoing, typically within the workplace (also known as ‘making a protected disclosure'). The Employment Rights Act 1996, as amended by the Public Interest Disclosure Act 1998, provides the legal framework for protecting workers from harm if they blow the whistle. The purpose of a prescribed person is to provide workers with a way of whistleblowing to an independent body that may be able to act on those concerns.

The FRC is a prescribed person under UK whistleblowing legislation. Therefore, individuals working outside the FRC, in the accounting, auditing or actuarial professions, may contact the FRC if they want to make a disclosure about their current or former employer in relation to matters that are within the scope of the FRC's regulatory remit.

During 2025/26, the FRC received 111 disclosures in its capacity as a prescribed person. As a result, we took the following action:

•

96 related to issues not within the remit of the FRC, so whistleblowers were signposted to the relevant bodies where appropriate.

•

15 were of direct relevance to the FRC's responsibilities and were considered by our teams.

As with our complaints processes, our whistleblowing procedure is regularly reviewed to ensure cases are dealt with appropriately and responded to promptly. Our published

policies include clear guidance on the types of concerns that can be raised and how cases will be handled.

During 2025/26, seven new complaints were received about the FRC. No significant issues of wider concern were raised, and the cases were handled under the FRC Complaints Procedure. Two of the concerns raised were regarding dissatisfaction that the FRC could not review a complaint about a professional body until the body's complaints process had been fully exhausted. Internal reviews determined that the complaints were handled in line with our policies and procedures.

The remaining five complaints were related to varying issues that were reviewed and responded to under the complaints process. Again, no issues of wider concern were raised. None of the complainants exercised their right to have their complaint escalated to the Independent Complaints Reviewer.

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The FRC is reporting a robust financial position in the second year of its 2025/28 strategy, driven by higher-than-forecast levy receipts, effective cost savings and our continued commitment to supporting the Government's agenda.

In March 2025, the FRC Group, comprising the FRC and the UKEB, set an overall budget for 2025/26 of £72.3m. Of this, £67.3m was for operating costs and £5.0m for the estimated costs of enforcement cases.

Our actual overall expenditure in 2025/26 was £65.6m. Actual core operating expenditure for the FRC Group during 2025/26 was £63.0m (£4.3m under budget). The underspend

is primarily driven by leadership attrition and delays in senior recruitment that created longer than expected vacancies, resulting in pay savings. Additional savings arose from business rates refunds and lower than budgeted IT support costs following a successful re-tender. Delays to the ERP programme further reduced planned in-year expenditure,

As a result of the overcollection and underspend, we made a surplus of £3.25m that will be transferred to general reserves for use in future years, subject to Department for Business and Trade (DBT) approval.

Despite ongoing macroeconomic volatility in 2025/26, we continue to anticipate both challenges and opportunities across the markets it regulates and remains committed to acting as a modern, agile regulator, while adhering to Managing Public Money principles.

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Audit firms contribute towards audit supervision work (£18.6m) while the Accountancy Professional Bodies contribute towards audit regulation, professional bodies supervision and part of the enforcement investigation activities (£14.5m). Levies from preparers of accounts contributed £31m during the year, with the remainder (£2.4m) principally from publication income and licences to use FRC products.

Chart 1 depicts our reserves level over the past five years. Year-on-year changes are a result of surpluses and deficits made.

At March 2026, the FRC held £20.0m in reserves that are held in FRC bank accounts and can be deployed with DBT consent.

Government Functional Standards set consistent expectations for key business areas, with performance assessed through self-assessment led by internal subject matter experts.

During 2025/26, the Government Functional Standards were significantly refreshed.

A comprehensive self-assessment was completed against the mandatory requirements, providing assurance to the Accounting Officer that the FRC meets most of the standards. Where full compliance has not yet been achieved, clear and proportionate justifications are in place, together with appropriate mitigations. Overall, this assessment confirms robust arrangements are in operation to support effective financial management,

strong counter-fraud controls and sound governance across the organisation.

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Our risk management framework is aligned with HM Treasury's Orange Book principles, emphasising a proportionate, pragmatic and evidence-based approach. This supports delivery of our strategic objectives and our wider public interest role. Risks are identified and managed in line with the Board's risk appetite, with structured, risk-based

decision-making embedded in our three-year strategy and Annual Plan and Budget.

A strong risk culture underpins this framework, with a regular programme of training and advice to promote expected behaviours, clear accountability and transparent decision-making across the FRC. This enables colleagues to identify, escalate and manage risks confidently and consistently.

Our risk and governance structure, built around the ‘three lines' model, underpins our ability to identify, assess and report risks. Internal controls testing and deep dives into our principal risks contribute to well-established risk processes, which are understood and used in day-to-day decision-making. Our 2025 self-assessment found that our overall risk maturity is reliable, repeatable and embedded.

The Board and ExCo review the effectiveness of the risk and internal controls framework through routine reporting for the Audit & Risk Committee. Reviews of policies, risk appetite, risk trends and areas of concern are discussed, with focus this year on data policies and cyber involving Board-level strategy sessions exploring the impact of AI on the FRC. This approach includes the assessment of the organisation's principal risks, set out below, and horizon scanning for emerging risks. The Committee receives assurance on the adequacy of the framework from the second line of defence, while ExCo ensures values, behaviours and policies are embedded to support a resilient risk culture. Oversight from Corporate Services provides the core elements of the second line of defence, ensuring

With ExCo sponsorship, we have developed a more proportionate and pragmatic way of working, including reassessing our risk landscape and designing a streamlined risk model for implementation in 2026/27. The new approach will empower divisions to take clearer ownership of their risks, strengthen accountability and embed proportionate,

well-evidenced assurance. Assurance mapping, co-designed with business areas, will support this transition and help to ensure risk management is both robust and practical.

In 2025/26, we implemented a proportionate approach to second line assurance, undertaking a programme of internal controls testing. This included a combination of thematic areas identified as opportunities for testing and self-assessment of our functional standards, with no major findings identified. We also consulted across the organisation to define what material controls means within the FRC. We used this to develop our five aggregated material controls and a testing schedule for our approach in 2026/27, in readiness to apply Provision 29 of the UK Corporate Governance Code.

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We use horizon scanning as part of our forward-looking risk management. We draw on external intelligence, market trends and internal analysis to spot emerging risks early and inform our strategic planning. However, we have identified horizon scanning as an area for further development as the FRC is operating in an external environment that is increasingly changeable. Work is underway to enhance our horizon scanning approach by integrating the wider insights generated by our market intelligence and insights work into our new approach.

•

Provide independent and objective assurance on governance, risk management and controls frameworks, alongside advice to support their effective operation and management controls

•

Set the boundaries for delivery through the definition of standards, policies, procedures and guidance

•

Identify, assess, own and manage risks

•

Design, implement and maintain effective internal control measures

•

Assist management in developing controls in line with good practice

•

Supervise execution and monitor adherence

•

Support the Audit & Risk Committee and Accounting Officer in their oversight responsibilities

•

Monitor compliance and effectiveness

•

Implement corrective actions to address deficiencies

•

Agree any derogation from defined requirements

•

Identify and alert senior management, and where appropriate governing bodies, to emerging issues and changing risk scenarios

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bjective 1 – The standards and expectations we set will enhance corporate governance, corporate reporting and investor stewardship in a manner that supports UK economic growth and investment.

Objective 2 – Our proportionate regulation of accounting, audit, assurance and actuarial work will expect and encourage high quality by those responsible, acting as an improvement regulator and dealing effectively and fairly with cases where there are significant or serious shortcomings.

Objective 3 – We will build on our deep understanding of corporate reporting and the audit and actuarial markets we oversee, and by being agile, we will identify and prepare for opportunities and challenges on the horizon.

Objective 4 – We will be a modern organisation, considered by others as a respected, effective and highly engaged regulator and by our colleagues as an inclusive and great place to work.

Medium – A moderate threat, but not a critical impact to the strategic objectives.

Low – Unlikely to have a significant impact on the strategic objectives.

Low – Unlikely to have a significant impact on the strategic objectives.

Medium – A moderate threat, but not a critical impact to the strategic objectives.

High – A high likelihood of  substantially affecting the strategic objectives should it occur.

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Changing political and business factors pose a risk to the FRC's reputation, potentially damaging stakeholder trust and confidence. This loss of credibility could hinder the FRC's ability to respond to market changes, engage stakeholders and fulfil its regulatory duties, ultimately affecting its core public interest purpose.

This description has been updated this year to better reflect the current nature of this risk.

The FRC has continued proactive engagement with stakeholders on key initiatives, enabling the organisation to anticipate stakeholder needs and understand the impact of its regulatory activity.

The latest Stakeholder Perceptions Survey shows strong support for the FRC and provides evidence of effective risk management.

Insights gathered through engagement and internal communication channels have helped limit the risk of misalignment with stakeholder priorities. For example, the recently announced call for views on the ISA for Less Complex Entities directly reflects feedback from the SME campaign and demonstrates the FRC's responsiveness.

Key spokespeople across the organisation have amplified these messages, helping position the FRC as an engaged and credible regulator, with positive responses from DBT ministers, business representatives and RSBs.

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The FRC fails to shape domestic and international accounting, audit and actuarial standards and expectations in line with our needs due to our influencing activity being ineffective (e.g. because we are not engaging the right stakeholders or our arguments are not sufficiently compelling). This could lead to divergence between international and national standards because international standards do not meet the needs of UK stakeholders. This in turn risks undermining the quality of information available for market decision-making or increasing costs and burdens for UK business.

This description has been updated this year to better reflect the current nature of this risk.

This work is grounded in a strong evidence base, drawing on cross-FRC insights, extensive stakeholder engagement and regular horizon scanning to identify emerging issues and prioritise activity.

The FRC also maintains an ongoing review of its Codes, standards and guidance to ensure they continue to underpin trust and confidence in decision-useful information, high-quality assurance and the effective functioning of UK financial markets. Positions agreed internally are consistently applied and only revisited where there is a clear and evidenced need.

Any proposed changes follow structured internal discussion with relevant stakeholders and subject matter experts. No material deviations have been required since the previous review.

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There is a risk that our supervisory model is not sufficiently effective, risk-based or proportionate, creating a failure to drive audit quality improvements or build firm(s) capability and market resilience, resulting in a lack of confidence in audit and a less sustainable audit market.

The controls for this principal risk continue to operate effectively, supported by regular governance through Supervision's senior leadership team, divisional oversight and an ongoing review of internal papers and regulatory reports for ExCo and the Board.

Clear progress is evident across core areas of Supervision. In PIE auditor registration, enhanced OPM monitoring, improved feedback loops with firms and recent streamlining of the approvals process all support effective risk management. In PIE audit inspection, ongoing dialogue with firms and audit committee chairs confirms that the risk-based programme remains on track.

We have begun phased implementation of a more proportionate and bespoke supervisory approach across the 12 largest firms, with further development planned for 2026/27. The approach has been designed to be scalable, enabling smaller firms to transition to the new model as they exit our Scalebox initiatives.

Due to weak data governance and limited awareness of data handling responsibilities, the organisation may fail to protect, manage and leverage its data effectively. This could result in data loss, breach of law/regulation, financial penalties, operational inefficiencies and reputational damage.

Governance has been strengthened through new data classifications, key policy updates (including the FRC Teams chat retention policy) and data storage improvements, such as the contract database.

While Information Asset Owners demonstrate strong divisional accountability, fragmented data architecture exposes the FRC to risk and highlights the need for a more coordinated FRC approach to ensure clear accountability and optimal use of resource.

FRC | Annual Report and Accounts 2025/26

46

As a result of poor or inconsistent internal management and leadership, or structures and systems, the FRC fails to adapt to change and deliver on its strategic objectives.

The organisation continues to actively manage this risk, with good progress made over the year.

Senior leadership meetings now operate with a consistent rhythm, supported by a steering group that coordinates agendas and ensures clear visibility of Board debriefs, corporate changes, policies and divisional priorities. This structure has helped to strengthen alignment and improve information flow across the organisation.

The Chief Operating Officer (COO) has proposed an ExCo/senior leadership team working relationship framework, designed to further enhance collaboration across FRC leadership.

In 2026/27, we expect the risk rating to be reduced to a divisional risk with ownership sitting with the COO.

Due to cybersecurity vulnerabilities and threats, the organisation may be exposed to cyber attacks or system compromise. This could result in data breaches, unauthorised access, legal breaches, financial penalties, reputational damage and operational disruption.

This year we strengthened assurance over our cybersecurity controls through the successful completion of the Cyber Essentials Plus accreditation. This provided external validation that our risk posture remains appropriate.

The team continues to undertake regular, proactive monitoring across the security estate and is supporting a cyber-secure culture through training, strict password enforcement and phishing testing.

We have introduced quarterly IT and security performance reporting to ExCo and the Audit & Risk Committee, improving executive oversight and assurance.

Despite this progress, the risk retains a high residual and target score due to the fast-evolving threat landscape.

FRC | Annual Report and Accounts 2025/26

47

Ruwan Weerasekera stepped down from the Board in December 2025. He joined the Board at a time of significant growth and transformation, and over his four and a half years at the FRC, his unique contributions and insight were greatly appreciated, not least of all in his role as non-executive director (NED) responsible for workforce engagement. I want to take this opportunity to again thank him for his dedication to the FRC.

We have also seen a number of changes to our ExCo. Elizabeth Barrett, Executive Director of Enforcement and Executive Counsel, resigned from the FRC in October 2025, and Sarah Rapson, Executive Director of Supervision, left the FRC to take on the role of Chief Executive of the Solicitors Regulation Authority in the same month. We also saw Kate O'Neill, Director of Stakeholder Engagement & Corporate Affairs, leave us in March 2026. While we were sorry to see them leave the FRC, I recognise the great asset that they have been in their time here, and am grateful to them for their commitment, expertise and leadership.

At the same time, I am delighted to have been able to welcome our two new Executive Directors, who joined ExCo in autumn last year. Anthony Barrett, previously FRC Director of Audit Quality Review, took on the role of Executive Director of Supervision in October 2025, and Penrose Foss joined the FRC as Executive Director of Investigations & Enforcement and Executive Counsel in December. We were pleased to see the strength and experience that these appointments added to the organisation as we continue to evolve our regulatory approach and maintain our effectiveness in overseeing the UK's audit and corporate reporting landscape.

I announced my own retirement in February 2026 and will be stepping down in September this year. I am immensely proud of what we have achieved in recent years and of the professionalism, integrity and commitment that I have seen at all levels of the organisation. While the naming of my successor is a matter for DBT, I was pleased that Clare Thompson, our Senior Independent NED, has been invited to play a part in the recruitment process

by serving on the interview panel. This demonstrates DBT's confidence in our Board and ensures that I will be leaving the organisation in good hands.

Chair

FRC | Annual Report and Accounts 2025/26

48

The FRC is an arm's length body (classified as a central Government non-departmental public body) and a private company limited by guarantee. It reports to the Secretary of State for Business and Trade and to Parliament on the discharge of its functions. The

Secretary of State for Business and Trade appoints the Chair and NEDs to the FRC Board, which is responsible for the FRC's strategy and monitoring its implementation.

Our governance structure is designed to provide the Board with the assurance and confidence that any proposals considered by them take account of the impact on our stakeholder community.

FRC | Annual Report and Accounts 2025/26

49

As a private limited company, the UK Corporate Governance Code does not apply to the FRC. However, as the regulator of the Code, the FRC upholds high standards of transparency, accountability and integrity and we align with the principles and provisions of the Code where they are relevant and applicable. As an arm's length body, the FRC also follows the Corporate Governance in Central Government Departments: Code of Good Practice and the Regulators' Code. Areas of departure from these Codes are explained below.

As the FRC is a private company limited by guarantee we have no shareholders, but we regularly engage with our stakeholders through a variety of communications and engagement. Further information can be found on page 25 in relation to our Section 172 statement.

As appointments to the Board are a matter for the Secretary of State, the procedure is not directly under the FRC's control. However, the Chair of the Board develops the

The People Committee also annually considers the balance of competencies to ensure alignment to:

•

The FRC's purpose and strategic priorities.

•

The environment in which it operates.

•

The characteristics, perspectives, independence and diversity of Board members.

•

Other factors relevant to its effectiveness.

This review informs any recommendations to the Secretary of State in respect of reappointments and the appointments exercise.

The FRC does not have shareholders, therefore members of the Board are not subject to annual shareholder re-election. The terms of appointment are set by the Secretary of State in accordance with the Public Appointments Process.

FRC | Annual Report and Accounts 2025/26

50

The Board is responsible for the strategic direction and supervision of the FRC, regularly reviewing operational plans and financial performance. It is also responsible for managing, assessing and mitigating risk. The Board is comprised of the Chair,

Chief Executive and seven NEDs (formerly eight until December 2025). The Board has delegated functions under the enforcement and disciplinary procedures to the Conduct Committee. It met eight times in 2025/26.

The roles of the Chair and the Chief Executive are held separately, ensuring a clear separation of responsibilities in line with the UK Corporate Governance Code. The Chair leads the Board and ensures its effectiveness through the management of Board meetings, agenda setting and supporting the optimisation of Board discussions. The Chair also takes a leading role in Board succession planning and ensuring effective communication with stakeholders.

As the Accounting Officer, the Chief Executive is personally responsible for safeguarding the public funds under their control, ensuring propriety and value for money in the handling of those public funds and the day-to-day operation and management of the FRC. The Chief Executive has a responsibility to the Permanent Secretary for Business and Trade as the Principal Accounting Officer for all public bodies in the DBT family, who delegates powers directly to the Chief Executive through a Framework Agreement.

In the financial year 2025/26, the Board discharged its responsibilities through Reserved Powers and through its Board committees, as outlined in the Governance Handbook.

The committees are composed of NEDs and are assisted by Senior Advisers who are subject matter experts and act as a sounding board for ongoing issues and topics. Representatives from the National Audit Office (NAO) and the Government Internal Audit Agency (GIAA) attend meetings of the Audit & Risk Committee. The biographies of all members of the governance structure, the Reserved Powers of the Board and the Terms of Reference for each committee, together with a summary of Board business, can be found in the Structure section of our website.

FRC | Annual Report and Accounts 2025/26

51

The Board and its committees have access to an appropriately qualified and experienced Company Secretary who provides independent advice on governance matters. They are responsible for working with the Chair, Chief Executive and ExCo to develop the agendas for Board and committee meetings and ensuring all governance procedures are complied with. The removal and appointment of the Company Secretary is a matter reserved for the Board.

The FRC reports to the Secretary of State for Business and Trade and Parliament on the discharge of its statutory functions and lays its Annual Report and Accounts before Parliament.

Appointments to the Board are made by the Secretary of State for Business and Trade in accordance with the Public Appointments Process. The Chief Executive is a permanent employee, and members of the Board are subject to three-year appointments, except the Chair, who is appointed for a four-year term. Following the announcement of Sir Jan du Plessis' intention to retire as Chair of the Board from 30 September 2026, a public appointment recruitment process was initiated with DBT. The FRC has also engaged Odgers Berndtson as the executive search firm to support this process.

The Board Diversity Policy sets out the Board's support for the Government's ambitions for diversity, and its commitment to work with the Secretary of State in pursuit of the Government's objectives. The Board annually reviews its skills matrix and succession plans throughout the year.

All Board members continued to receive bespoke training on various matters throughout the year.

Board meeting agendas are curated in advance by the Chair, Chief Executive and the Executive team to ensure an appropriate balance between strategic and operational matters. The Board agenda includes a report from the Chief Executive on important operational matters, and the Board regularly receives key information on the delivery of the strategy, finances, risks, HR matters and the internal control environment.

The Chairs of the Audit & Risk, People and Conduct committees update the Board on the proceedings of their meetings, including key discussion points and matters for approval. For more detail, please see the reports on the individual committees on pages 65-71.

The Board assesses, constructively challenges and considers the Executive's proposals and matters for decision to ensure they are aligned with the FRC's strategy and purpose. The focus of the Board's business throughout the year can be assessed through the lens of the seven broad themes outlined on pages 58-59. The Board and Executive are assisted by Senior Advisers who are subject matter experts.

FRC | Annual Report and Accounts 2025/26

52

Audit & Risk

People

Chair

Chief Executive Officer and Accounting Officer

Conduct

Appointed Attendance: 8/8

Appointed Attendance: 8/8

Bold and black keyline denotes Chair of the Committee

Sir Jan had a career in business, including serving over a period of 18 years as Chair of various public companies: BT Group plc (2017 to 2021); Rio Tinto

Richard has over 25 years of Board-level experience across a range of regulated sectors. Prior to joining the FRC, he was CEO of the UK's Civil Aviation Authority and before that the

Full biographical details of each director are available at www.frc.org.uk

plc (2009 to 2018); SABMiller

plc (2014 to 2016); RHM plc

CEO of the Legal Services Board, which oversees the regulation of the legal professions. Earlier in his career he held senior roles in the regulation of social housing, communications and energy. He has also held roles in the private sector, such as director of a water company and partner

(2005 to 2007); and British American Tobacco plc (2004 to 2009). These roles have given him extensive experience in leadership and the governance of some major public companies. He has also had multiple interactions with the institutional investment community and gained meaningful insight into the challenges facing the audit services sector.

for a consultancy.

In a non-executive capacity, he was Deputy Chair of the Social Housing Regulator, responsible for the governance and financial viability of social landlords.

Sir Jan has also served as NED of Marks and Spencer Group plc and Lloyds Banking Group plc.

Outside of the FRC, Richard is Chair of a housing association.

From 1988 to 2004 he was CFO of Richemont.

FRC | Annual Report and Accounts 2024/25

Clare Thompson
Senior Independent
Non-Executive Director

Audit & Risk

Independent Non-Executive Director

People

Conduct

Appointed Attendance: 8/8

Appointed Attendance: 8/8

Bold and black keyline denotes Chair of the Committee

Angela is a solicitor by profession and a former partner of Pinsent Masons, where she spent two decades of her legal career.

Clare retired from PwC in 2011, having been a partner for 23 years. At PwC she was Audit/ Lead Partner on major financial services groups and served

She specialised in advising financial services sector clients, initially on the development and outsourcing of technology but increasingly on business change and transformation projects.

Full biographical details of each director are available at www.frc.org.uk

Since leaving PwC, she has built a portfolio of non-executive roles and has served as Senior Independent Director and Chair of the Audit Committee at Bupa,

Angela's management roles included Integration Partner following the merger to form Pinsent Masons and Joint Head of the firm's financial services sector practice.

Chair of the Audit Committee of Bupa's UK insurance business, a NED of Direct Line Insurance Group plc, a NED of Retail Charity Bonds plc, Chair of the Audit Committee of Miller Insurance Services LLP and Treasurer of the Disasters Emergency Committee.

Since retiring from the partnership in 2010, Angela has pursued her legal career on a consulting basis, combining this with a non-executive career in the mutual sector (at the Bath Building Society where she

Clare is a member of the Institute of Chartered Accountants in England and Wales (ICAEW).

was deputy Chair and Senior Independent Director) and the third sector (at the NSPCC where she was a co-opted member of the Audit & Risk Committee).

Clare is a Senior Independent Director and Chair of the Audit Committee at M&G plc.

Angela is a NED at the Saffron Building Society.

FRC | Annual Report and Accounts 2024/25

Hannah Nixon
Independent Non-Executive
Director

Audit & Risk

Independent Non-Executive Director

People

Appointed Attendance: 8/8

Conduct

Appointed Attendance: 8/8

Bold and black keyline denotes Chair of the Committee

David is a solicitor by profession and was a partner in international law firm Herbert Smith Freehills (and predecessor firm Herbert Smith) for many years. He was Managing Partner of Herbert Smith from 2008 to 2012 and Joint CEO of Herbert Smith Freehills from 2012 to 2014.

Hannah has widespread experience in economic regulation across a range of industries. She brings significant experience of developing, implementing and enforcing regulatory regimes and influencing public policy. She was the first CEO of the Payment Systems Regulator, the economic regulator of the UK's £80tn payments industry, responsible for driving competition and innovation in the interests of consumers. She was also a senior partner at Ofgem, where she had responsibility for the networks division.

Full biographical details of each director are available at www.frc.org.uk

He was previously a member of the governing body of Queen Mary University of London, where he chaired the Audit & Risk Committee, a member of the Board of the Solicitors Regulation Authority, where he chaired the Finance & Audit Committee,

Hannah is currently Chair of the Single Source Regulations Office, the UK regulator for non-competitive defence procurement, Chair of the Retail Energy Codes Company, and a NED of the National Energy System Operator and Worldpay UK.

a charity supporting adults with learning disabilities, where he chaired the Finance & Resources Committee. He stood down as Chair of Paradigm Trust, a multi-academy trust, in January 2026.

FRC | Annual Report and Accounts 2024/25

Charlie Parker Independent Non-Executive Director

Audit & Risk

Simon O'Regan Independent Non-Executive Director

People

Appointed Attendance: 7/8

Conduct

Appointed Attendance: 8/8

Charlie was previously Chief Executive and Head of the Public Service for the Government of Jersey. Prior

Bold and black keyline denotes Chair of the Committee

Simon has over 40 years' experience in the insurance, pensions and asset management industries. He is a UK Chartered Actuary and has lived and worked in six countries around the world including as CEO

to this, he was Chief Executive of Westminster City Council and Chief Executive of Oldham Metropolitan Borough Council. During his various roles as a Chief Executive, Charlie oversaw the significant transformation and modernisation of a large

Full biographical details of each director are available at www.frc.org.uk

of Mercer in Australia, in the UK, in Europe and in the USA/ Canada. Simon was formerly a NED of Alexander Forbes Group Holdings Ltd. Simon was a member of the UK's Nuclear Liabilities Financing

number of public services, often resulting in reduced costs and improved performance.

Charlie is a NED of NewRiver REIT plc, where he is Chair of the Remuneration Committee and a member of the Challenge Board overseeing the Buckingham Palace Reservicing Project.

Assurance Board and served as a non-executive member of the Foreign, Commonwealth and Development Office's Audit & Risk Assurance Committee.

Charlie is also a Director and Trustee at Griffin Investors Ltd.

Simon is the Chair of Impax Asset Management Group plc.

FRC | Annual Report and Accounts 2024/25

Ruwan Weerasekera was appointed to the Board on

and resigned on

4 December 2025.

Audit & Risk

Independent Non-Executive Director

People

Appointed 28 November 2024 Attendance: 8/8

Conduct

Bold and black keyline denotes Chair of the Committee

J.P. Morgan for 27 years and UBS for 12 years. She has significant leadership experience in investment banking, corporate banking and wealth management,

Full biographical details of each director are available at www.frc.org.uk

across several geographies and markets. She has served on the Board of Transport for London, including on its Finance & Policy Committee, and on the UK Government's Investment Council. Eva has also served as the Chair of the UBS Optimus Foundation UK.

Eva is a NED at CapMan, a Nasdaq Helsinki-listed and headquartered private equity investor, and SEB (the former Skandinaviska Enskilda Banken), a Nasdaq Stockholm-listed and headquartered wholesale bank.

FRC | Annual Report and Accounts 2024/25

The Senior Advisers provide advice, feedback and mentoring and act as sounding boards for ongoing issues and topics.

•

Noted the announcement from Government regarding audit reform legislation.

•

Supported the Senior Independent Director and DBT in the commencement of recruitment of a new Chair, following the announcement of the retirement of Sir Jan du Plessis.

•

Approved the FRC Annual Report and Accounts 2024/25.

•

Approved the FRC's Plan and Budget for 2026/27.

•

Received regular updates from the Chief Executive and Executive team in respect of the Plan and Budget, key risks, OPMs, the operating environment and forward planning priorities.

•

Approved the UKEB Due Process Oversight report to the Secretary of State.

•

Discussed Executive succession plans and supported the recruitment of two new members of ExCo.

•

Considered Audit Market and Competition developments.

•

Approved the publication of the 2025 Stewardship Code and Feedback Statement.

•

Approved the Annual Report on Corporate Reporting.

•

Approved the publication of Amendments to Financial Reporting Standard (FRS) 101 Reduced Disclosure Framework – 2024/25 cycle.

•

Approved the publication of Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – Adapted formats.

•

Approved the publication of the Actuarial Standards Technical Memorandum 1 (ASTM1), along with the ‘Feedback Statement and Impact Assessment: AS TM1: Statutory Money Purchase Illustrations'.

•

Agreed the commencement of work to facilitate the launch of a Voluntary Register for Sustainability Assurance Practitioners.

•

Received regular updates on the regulatory standards and codes divisional activities, international standard setting activities and the FRC's international standard setting strategy.

•

Noted the Technical Actuarial Guidance to help pension scheme actuaries provide retrospective confirmation to validate historic changes to pension scheme rules.

•

Approved the issuance of several consultation documents relating to developing or updating regulatory standards and codes.

•

Approved amendments to ISA 240 (UK) and 540 UK Standards.

•

Considered Practice Note 28 to provide guidance for audits of small and medium-sized entities.

FRC | Annual Report and Accounts 2025/26

58

•

Agreed a revised supervisory approach as a result of FASS.

•

Approved the publication of the Annual Review of Audit Quality.

•

Approved the publication of the 2025 Crown Dependencies Annual Report.

•

Approved the Professional Body Oversight Report to the Secretary of State.

•

Approved the Independent Supervisor's Report on the Auditors General to the Secretary of State.

•

Approved changes to the PIE Auditor Registration Regulations.

•

Received regular updates on the activities of the Enforcement Division and Conduct Committee activities.

•

Approved the End-to-End Enforcement Review consultation and considered the feedback from stakeholders.

•

Received regular updates from the Stakeholder Engagement & Corporate Affairs team on how the FRC engages with

its stakeholders.

•

Considered feedback from the stakeholder perceptions survey.

•

Approved commissioning of the 2026 Board Performance Review.

•

Reviewed the Gifts and Hospitality Policy and Conflicts of Interest Policy.

•

Approved amendments to the Governance Handbook.

•

Approved the FRC's Modern Slavery Statement.

•

•

•

Provided input and constructive challenge to support ongoing development of the risk management framework, considered emerging and principal risks and received assurance that the risk and control environment is effective.

•

Agreed the procurement of new ERP tools to support our financial and HR systems.

FRC | Annual Report and Accounts 2025/26

59

The Board undertakes an annual review of its own and its committees' effectiveness, with a formal externally facilitated effectiveness review carried out at least every three years in accordance with the Corporate Governance Code. This year's review was internally facilitated by the Chair and supported by the Company Secretary. It comprised a Board and Committee questionnaire, alongside individual discussions with each director. In addition, the Senior Independent Director met with NEDs, in the absence of the Chair, to

consider the Chair's performance, and subsequently provided collective feedback directly to the Chair.

The Board reviewed progress against the actions arising from last year's review, noting the completion of actions focused on strengthening risk management, enhancing discussion of emerging issues and trends within the audit market, and making greater use of horizon scanning to support consideration of emerging risks.

The Board approved an action plan arising from this year's effectiveness review covering both Board and committee actions. Key priorities for the year ahead include:

Succession planning: refreshing the ExCo succession plan with clearer pipelines and risk mitigations, reflecting recent changes to its composition.

Internal audit: strengthening internal audit capability, including the timeliness of delivery.

Risk management: further maturing the effectiveness of the internal control framework and improving the articulation and practical application of risk appetite.

FRC | Annual Report and Accounts 2025/26

60

The Chief Executive, as Accounting Officer, is personally responsible for implementing the strategy agreed by the Board, the use of public funds in delivering this strategy, and the day-to-day running of the FRC. The CEO is supported in this role by an Executive Committee. It meets weekly to discuss operational, strategic, financial, reputational and workforce matters in support of the day-to-day running of the organisation and to further the objectives established by the Board.

•

Strategy: including the development of the Strategy and Plan and Budget. The Committee also monitors progress against agreed objectives.

•

Operational: including reports from the Chief Operating Officer and Finance Director on management accounts, procurement, IT (including cybersecurity), OPM reporting and office management matters.

•

Risks and internal controls: in addition to routine risk reports, the Committee engages in deep dives into the FRC's principal risks and considers the effectiveness of the FRC's internal control and risk management framework.

•

People: including key people-related policies, FRC culture, colleague survey results and hybrid working arrangements.

•

Stakeholder engagement: including consideration of feedback on key stakeholder matters and responses to FRC publications. This informs our future policy work and offers insight into possible future issues and areas of work. The Committee also focuses on internal communications and messaging.

•

Policy: including both internal and external policy positions.

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61

Mark Babington
Executive Director of
Regulatory Standards

Chief Executive Officer,

Statutory Director and Accounting Officer

Richard leads the executive team and is responsible for the implementation of the FRC's strategy. As Accounting Officer, he ensures the FRC is run in accordance

Mark leads the division responsible for the FRC's technical and public policy work covering audit, corporate reporting, corporate governance and stewardship, actuarial and digital reporting and taxonomies. Prior to joining ExCo, Mark led the FRC's UK Audit Policy programme,

with the Framework Agreement from DBT, the requirements of the Managing Public Money principles, and any additional instructions and guidance issued from time to time by DBT, HM Treasury and the Cabinet Office, while maintaining the FRC's position as an independent regulator.

implementing measures to support greater competition in the UK audit market and work to support the reform of international standard setting for auditors, by global regulatory authorities.

For details of Richard's experience, see page 53.

Mark has previous experience as a Board Member and Audit & Risk Committee Chair. He is also a member of the International Ethics Standards Board for Accountants (IESBA), which sets the global Code of Ethics for the accountancy profession, and chairs IESBA's Sustainability Task Force. Before he joined the FRC, Mark had a 20-year career in audit and was a Director at the UK NAO.

FRC | Annual Report and Accounts 2025/26

Executive Director of Supervision

Executive Director of Investigations & Enforcement and Executive Counsel

Anthony leads the FRC's supervisory functions across the UK audit market, including oversight of audit firms, professional bodies and corporate reporting by large businesses. He contributes to the strategic direction and delivery of the FRC's public interest mandate in support of UK economic growth. He also acts as the executive's most senior adviser to the FRC

Penrose joined the FRC in 2025, leading the Enforcement division's teams of forensic accountants and lawyers operating across the FRC's enforcement regimes.

Penrose has extensive experience of investigations and litigation drawn from the private sector and Government, with particular expertise in the conduct of large, complex regulatory investigations and dispute resolution involving auditors, accountants and actuaries.

Board and its committees on supervision-related matters.

Penrose sits as a First-tier Tribunal Judge of the General Regulatory Chamber.

Previously, Anthony was the Director of Audit Quality Review at the FRC, responsible for overseeing the delivery

FRC | Annual Report and Accounts 2025/26

Chief Operating Officer

Director of Strategy & Change

Vinita joined the FRC in January 2025, leading the Corporate Services division. As a member of ExCo she oversees Finance, Procurement, HR, Information Systems, and Facilities and Estate Management.

Miranda joined the FRC in March 2020, initially with responsibility for delivering the transformation programme, and

now the FRC's wider change agenda. The Strategy & Change directorate includes the Market Intelligence & Insights and Stakeholder Engagement & Corporate Affairs teams, supplying the FRC with strategic enabling functions across economic and data analysis, competition expertise, research, communications and stakeholder engagement.

Previously, Vinita served as Director of Corporate Operations at the Office of Rail and Road (ORR), where she led a team

of 40 people and was the first Director to be based regionally. She managed the organisation's £41m budget, while developing the ORR's first Environmental Strategy and in 2024, refreshed its Diversity and Inclusion Strategy.

Having qualified as a chartered company secretary while at Ernst & Young, Miranda has over 20 years of governance experience across professional services, large private and listed companies. She has also held senior secretariat roles at various large private and FTSE-listed groups. Miranda spent 2019 seconded

With over 20 years of public sector leadership experience, including significant time at Highways England as Performance and Change Director and Designated Funds Director, Vinita has expertise in strategic leadership and organisational transformation. She holds a Post Graduate Certificate in Leadership & Management and an LLB Honours

to the Department for Business, Energy & Industrial Strategy, leading on the Independent Review into the Quality and Effectiveness of Audit, supporting Sir Donald Brydon's comprehensive review of audit; its purpose, user

Law Degree.

needs and future direction.

FRC | Annual Report and Accounts 2025/26

I am pleased to present the Conduct Committee report for the year ended 31 March 2026, which provides an overview of the work of the Committee and the key matters it addressed over the year. The Conduct Committee's work involves careful consideration. It must balance the impact of its decisions on firms and individuals who work in the highly technical, and often challenging, profession of accounting, auditing and actuarial work against the FRC's purpose to protect the public interest, uphold the standards the market expects and relies upon, and hold to account the few who fall below those standards.

In 2025/26, we opened seven investigations. While the number of investigations opened each year has been declining since 2023/24, there are a number of underlying factors that may impact the number opened in any year. It is too early to assess whether the trend seen over recent years of a reducing number of investigations being opened has reversed. Audit quality has improved across most of the larger firms and we continue to work with those firms on the PIE Audit Register that undertake smaller numbers of PIE audits to help them enhance their audit quality.

There are 25 investigations open as of 31 March 2026, compared with 32 as of 31 March 2025. Key activities considered by the Committee this year included:

•

Overseeing the work of the Case Assessment team: receiving regular updates on the nature and number of enquiries being opened and closed by the Case Examiner.

•

Enforcement case review: looking at information presented by the Case Examiner, Legal Services team and Executive Counsel to support its decision-making role, ensuring thorough discussion and scrutiny of that information.

•

Accountancy and actuarial schemes: considering matters under the Schemes.

•

Enforcement Committee: overseeing submission to the Enforcement Committee on matters under the Auditor Regulatory Sanctions Procedure and the Crown Dependency Recognised Auditor Sanctions Procedure, which are used for local authority audits and Crown Dependency audits respectively.

•

Risk management: emerging issues, risks or delays relating to open investigations.

•

OPMs and milestones: how the progress of investigations is measured and monitored.

•

Publication of enforcement-related matters: the timing and content of certain enforcement-related publications.

•

Succession planning: recruiting a new Senior Adviser.

•

Budget approvals: review and approval of budgets for investigations and enforcement.

•

Committee effectiveness review: conducting an annual review of the Committee's effectiveness.

•

E2E: the Committee played an active, influential role in shaping the review, participating in a dedicated project team led workshop and providing strategic input to support the development of a more integrated, modernised enforcement process.

Chair of the Conduct Committee

FRC | Annual Report and Accounts 2025/26

65

The Conduct Committee is responsible for the oversight of the FRC's enquiries, investigations and enforcement function, ensuring that appropriate cases are investigated and conducted fairly, in the public interest, in a timely manner and in accordance with due process and the Regulators' Code.

The Committee met eleven times in 2025/26.

David Willis (Chair)

Angela Cha (Deputy Chair)

Charlie Parker*

Simon O'Regan*

Anne Whitaker

David Snell

Richard Lawrence

*Charlie Parker and Simon O'Regan joined the Committee on 1 April 2025 but were unable to attend all meetings due to pre-existing diary commitments that pre-dated their appointments.

FRC | Annual Report and Accounts 2025/26

66

I am pleased to present the Audit & Risk Committee report for the year ended March 2026, which provides an overview of the work of the Committee and the key matters it addressed over the year. The Committee continues to support the Board in its review of the integrity of financial reporting and ensures that risk management and internal controls remain robust and appropriately managed.

Key activities considered by the Committee this year included:

•

Reviewing the risk management framework: identifying improvements, continuing to build out the assurance mapping process and adopting a renewed approach, focusing on broader themes to provide greater oversight and assurance, evaluating the principal risks and the organisation's risk profile.

•

Reviewing and approving the material controls: considering planned activities, the assurance plan and the deep dive schedule for reporting against Provision 29 of the Corporate Governance Code 2024 at 31 March 2027.

•

Quarterly updates: on IT and information security.

•

Annual Report and Accounts: reviewing and recommending to the Board.

•

GIAA audit: receiving regular reports from the GIAA on the result of its audits and agreeing its 2026/27 plan.

•

Oversight of the activities of the internal audit function and external auditors: including an evaluation of their effectiveness based on the Committee's own interaction with the internal and external auditors, as well as a questionnaire with key internal stakeholders.

•

Approved updates to the Fraud Prevention and Bribery & Anti-Corruption Policies: aligning with the requirements of failure to prevent fraud under the Economic Crime and Corporate Transparency Act 2023.

•

Committee effectiveness review: reviewed its own effectiveness as part of the internal Board and committee performance review.

The Committee also receives regular and relevant updates from the Finance team to ensure that the FRC has complied with its obligations as set out in Managing Public Money. In 2026/27, the focus will remain on strengthening our risk management approach and internal controls. Priority areas include cybersecurity, data and information management and AI governance risks. The Committee will continue to use deep dive sessions to support discussion on key topics and monitor emerging risks through horizon scanning. Downside scenario planning will also be used to test organisational resilience and inform the assessment of key risks.

Chair of the Audit & Risk Committee

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The Audit & Risk Committee supports and advises the Accounting Officer (the Chief Executive) and the Board through:

•

providing oversight of the financial reporting process and use of public funds

•

corporate governance

•

the external and internal audit process

•

the system of internal controls

•

information technology

•

the identification and management of significant risks

•

compliance with laws and regulations.

The Committee held five meetings in the 2025/26 financial year. In addition, it met with the external and internal auditors (without the presence of management) from the NAO and GIAA respectively.

The Committee is composed of individuals with recent and relevant audit, risk and financial experience, both in the private and public sectors and listed environments. The Chair, Clare Thompson, is an ICAEW Chartered Accountant and former Audit Partner, with non-executive experience including as an Audit Committee Chair.

Michael Hearty, Senior Adviser, is also appointed to the Committee and brings a public sector finance background, including experience of organisations undergoing transformation.

With these appointments, the Board is satisfied that the combined knowledge and financial experience of the Committee members ensured it could fulfil its responsibilities effectively.

Clare Thompson (Chair)

Eva Lindholm

Hannah Nixon

Ruwan Weerasekera1

Michael Hearty (FCPFA)

1 Ruwan Weerasekera resigned from the Committee on 4 December 2025.

Other regular attendees at the Audit & Risk Committee meetings included the FRC Chair, Accounting Officer, Chief Operating Officer, Finance Director, Director of Legal Services, Head of Risk, NAO and GIAA.

The NAO was appointed as external auditor in 2019. Eleanor Parker was appointed as Senior Statutory Auditor in October 2025. She has no conflicts of interest. Eleanor is not part of the NAO's Central Quality team, nor is she responsible for PIE audits inspected by the FRC. The Board reviews how the relationship and any potential conflicts of interest between the NAO and the FRC are mitigated each year prior to appointing the FRC's external auditors. To protect the objectivity and independence of the external auditor,

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it is the FRC's policy that it is not contracted to carry out any non-audit services and no such services were provided during the financial year.

The Committee reviewed and recommended to the Board the Annual Report and Accounts for the financial year ended 31 March 2026, having confirmed that it satisfied all applicable legal and regulatory obligations. The Committee also considered the letter of support issued by DBT to the FRC and the letter of representation issued to the auditors, and received the auditors' ISA (UK) 260 report setting out any matters arising from the audit.

The Committee concluded that the Financial Statements should continue to be prepared on the going concern basis of accounting, given DBT's Letter of Comfort.

In assessing whether the Annual Report and Accounts are fair, balanced and understandable on behalf of the Board, the Audit & Risk Committee considered:

•

The information contained within the Strategic Report, ensuring it represents a fair reflection of performance during the year under review.

•

Key judgement areas, accounting and reserves policies.

•

The key messages in the Annual Report, ensuring they are clear, consistent and easily understood.

A key source of independent assurance for the FRC is the internal audit function provided by the GIAA, which complies with the Public Sector Internal Audit Standards. It provides the Accounting Officer and the Audit & Risk Committee with an annual opinion on the adequacy and effectiveness of the organisation's control environment. The internal audit programme of work aligns closely with the organisation's principal risks and strategic objectives, providing a balanced view and coverage of the business.

The GIAA provided an overall ‘moderate' opinion on the framework of governance, risk management and control for 2025/26. This rating is in line with last year, with the GIAA's view being that the FRC continues to make incremental improvements to its control environment. The risk management maturity level shows repeatable processes and defined roles, with some elements going beyond this and showing signs of being integrated into the business, as identified during the audit of risk management this year. The recommendations from that audit supported the planned changes to be delivered as part of our new risk approach, explained further in section 13.

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•

Succession planning: including recruitment of the Executive Counsel, Executive Director of Supervision and senior advisers.

•

•

•

Consideration of the annual People Survey: including discussion and review of the outcome.

•

Updates from the Designated Workforce Director: covering discussions held at the People Forum.

•

Regular updates from the Chief People Officer on HR matters: including learning and development opportunities being offered to our people.

•

•

•

Committee effectiveness review: reviewed its own effectiveness as part of the internal Board and committee performance review.

•

•

Gifts and Hospitality Policy: review and approval of changes to the policy.

•

Gifts and Hospitality Register and Register of Interests: review of both for Board members, ExCo and senior advisers (bi-annually).

•

Quarterly publication of expenses: approval of publications for Board and ExCo members.

Chair of the People Committee

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The Committee provides strategic direction on issues relating to the appointment and recruitment, remuneration, talent management and welfare of FRC colleagues and non-executive members and advisers. The NED with responsibility for workforce engagement regularly reports into this Committee to improve visibility of people matters at Board and Committee level. The Committee met five times in 2025/26.

Jan du Plessis (Chair)

Angela Cha

Clare Thompson

Charlie Parker

David Willis

Eva Lindholm

Hannah Nixon

Simon O'Regan

Ruwan Weerasekera1

1 Ruwan Weerasekera resigned from the Committee on 4 December 2025.

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The Chief Executive is the only executive member of the Board. The performance of the Chief Executive and the Executive Directors are assessed against both collective objectives, set in line with the FRC Plan and Budget, and individual objectives.

Salaries are reviewed annually. The Chief Executive and ExCo members approve the annual pay principles that drive the annual compensation plan for the FRC, subject to final approval by DBT. The People Committee is also consulted. The overall budget for pay is aligned with the UK Government annual pay remit.

Any annual increase awarded reflects the individual's role, their performance, movement in market rates

To provide core remuneration for the role, recognising the responsibility for setting and delivering the annual FRC Plan and Budget.

and increasing competency within their role.

The People Committee approves the remuneration of the Chief Executive and other Executive Directors, subject to final approval by DBT, taking account of their responsibilities, performance and experience, alongside market

All colleagues offered employment prior to

1 June 2018, are eligible to receive benefits that may include:

To provide a competitive and cost effective benefits package in line with public sector norms.

•

Dental insurance

•

Private health insurance

•

Income protection insurance

•

Life insurance

In aligning the FRC's remuneration policy more closely with the public sector, new joiners who started from 1 June 2018 are no longer eligible for dental or private health insurance.

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All colleagues are eligible to participate in the group personal pension scheme, which is a Defined Contribution scheme.

A maximum of 10% of base salary.

To provide competitive retirement benefits in line with relevant market comparators.

Colleagues offered employment prior to 1 June 2018 were able to elect to take pay in lieu of pension contributions less an amount equivalent to National Insurance contributions, but this has been discontinued for employees offered employment after 1 June 2018.

The FRC provides a modest cash award to all eligible employees with qualifying service and personal performance reflecting the overall performance of the FRC during the year.

An in-year award of £1,300 was made to

all qualifying employees.

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The following table provides details of the remuneration and pension interests of the most senior management of the FRC. As a limited company, this comprises the registered directors. The totals for 2024/25 have been restated to show the applicable bandings for the actual amounts reported.

Sir Jan du Plessis

Angela Cha

Eva Lindholm (from 28/11/2024)

Hannah Nixon

Simon O'Regan (from 28/11/2024)

Charlie Parker (from 28/11/2024)

Clare Thompson

Ruwan Weerasekera (to 04/12/2025)

David Willis

Executive directors (Richard Moriarty, Chief Executive Officer)

Where directors have served for part of a year, the amounts shown are for the relevant proportion of the year.

1.

For NEDs, the benefits value reflects the cost of reimbursing their travel to FRC offices.

2.

Salary value includes allowances and other cash pay elements that are subject to UK taxation. The amounts shown are post salary sacrifice, which may result in decreases compared with previous years.

3.

For Executive Directors, the benefits value is the cost of life assurance and income protection.

4.

Pension benefit is the total value of employer payments to a Defined Contribution pension scheme.

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The following table shows the ratio between the mid-point of the banded remuneration of the highest paid director, to the pay and benefits figures and full-time equivalent salary component of the employees who are on the 25th, 50th and 75th percentiles of all FRC employees.

Total pay and benefits

Salary component

The following table shows the total pay and benefits figures and full-time equivalent salary component of the employees who are on the 25th, 50th and 75th percentiles of all FRC employees.

Total pay and benefits

Salary component

Based on the salary component, the banded remuneration of the highest paid Director, the Chief Executive Officer, was £355,000 - £360,000 per year (2024/25: £345,000 - £350,000). This was 3.40 times (2024/25: 3.45) the median remuneration of the workforce, which was

£105,120 (2024/25: £100,594).

The average percentage change in the salary and allowances of the Chief Executive Officer from 2024/25 was 2.88% due to an increase in base salary. The Chief Executive Officer does not receive any performance-related pay or bonus but received the same non-consolidated award as all other eligible employees. The average percentage change in the salary and allowances of FRC employees from 2024/25 was 4.50% because of the 2025 pay review. The average percentage change in the performance-related pay and bonuses for FRC employees was an increase of 18.18% following the decision to increase the award to £1,300 (2023/24: £1,100).

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No. of existing engagements as at 31 March 2026

Of which, number that existed:

Less than 1 year

For between 1 and 2 years

For between 2 and 3 years

For between 3 and 4 years For 4 or more years

No. of temporary off-payroll workers engaged during the year

Of which:

Not subject to off-payroll legislation

Subject to off-payroll legislation and determined as in-scope of IR35 Subject to off-payroll legislation and determined as out-of-scope of IR35

Number of engagements reassessed for compliance or assurance purposes during the year

Of which: number of engagements that saw a change to IR35 status following review

No. of off-payroll engagements of Board members and/or senior officials

during the year

0

Total no. of individuals on payroll and off payroll that have been deemed

“Board members and/or senior officials with significant responsibility” during

the financial year. This includes both on-payroll and off-payroll engagements

Information on employee numbers and the cost of temporary people and consultants are included in note 5 of the Financial Statements.

Redundancy and other departure costs incurred are set out below. A compulsory redundancy is any departure resulting from a restructure or other change leading to a role ceasing to exist. Other departures are those mutually agreed with the individual concerned.

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2024/25

2025/26

Exit package cost band

< £10,000

£10,000 - £25,000

£25,001 - £50,000

£50,001 - £100,000

£100,001 - £150,000

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Business model

Our business model

Values

Our business model

Strategy

Our business model

Chief Executive's report

Likely future developments

Our business model

Chief Executive's report

Principal activities

Chief Executive's report

Chief Executive's report

Research and development activities

Analysis of performance

Operational Performance Measures

and current position

Financial Statements

Post-balance sheet events

Notes to the Financial Statements

Risk management

Factors affecting future development and

long-term viability

Risk management

Principal risk and risk management policies

Financial risks

Financial review

Notes to the Financial Statements

Reviews of internal controls

Audit & Risk Committee report

Bribery &

Compliance

Anti-Corruption Policy

Whistleblowing

Compliance

Procurement policy

Compliance

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Payment practices

Compliance

Modern Slavery Statement

Compliance

Section 172 statement

Section 172 and stakeholder engagement

Stakeholder interests

Section 172 and stakeholder engagement

Gender pay gap reporting

Our people and culture framework

Pay ratios

Remuneration framework – pay multiples and director remuneration

Governance and transparency framework

Corporate governance statement

Governance and transparency framework

Names of directors holding office

Our people and culture framework

Statement on employment of disabled persons

Environmental impacts

Streamlined energy and carbon reporting

Data security (SASB)

Compliance

Our people and culture framework

Workforce diversity and engagement (SASB)

Compliance

Professional integrity (SASB)

The directors (including the Chief Executive as Accounting Officer) are responsible for preparing the Annual Report and Financial Statements in accordance with applicable laws and regulations. Company law requires the directors to prepare Financial Statements for each financial year.

The directors have elected to prepare the Financial Statements in accordance with the Companies Act 2006 and the International Financial Reporting Standards (IFRS), as adapted or interpreted by the HM Treasury Government Financial Reporting Manual (FReM). The directors must not approve the Financial Statements unless satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for the period.

In preparing these Financial Statements, the directors are required to:

•

Select suitable accounting policies and apply them consistently.

•

Make judgements and accounting estimates that are reasonable and prudent.

•

State whether the IFRS as adapted or interpreted by FReM have been followed, subject to any material departures disclosed and explained in the Financial Statements.

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•

•

They are also responsible for safeguarding the assets of the FRC and, hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In assessing the going concern, the Board is satisfied that the FRC will continue to operate for a minimum of 12 months after the approval of the Financial Statements. In addition, DBT provides the FRC with confirmation that it would help the FRC meet its financial obligations, if necessary, that would allow the FRC to continue its operations for a minimum of 12 months after the approval of the Financial Statements.

On page 51, we have included information on the names of the individuals who, at any time during the financial year, were directors of the FRC, as well as their attendance.

NEDs are appointed for fixed terms, which may be renewed, rather than being submitted for re-election at regular intervals. There were no new appointments made during the financial year under review.

During the financial year under review, Ruwan Weerasekera resigned from the Board on 4 December 2025.

•

Is removed from office pursuant to the provisions of Articles of Association 5.1.

•

Resigns his or her office by notice in writing received at the registered office of the company.

•

Ceases to be a member of the company.

•

Ceases to be a director by virtue of any provision of the Companies Act, or otherwise becomes prohibited by law from being a director.

•

In the case of the Chief Executive, ceases to hold that position.

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Under the terms of the FRC's Articles of Association, all directors are members of the FRC and each has undertaken to guarantee the liability of the FRC up to an amount not exceeding £1. There are no other members and no dividend is payable. The FRC purchased

and maintained the directors' and officers' liability insurance in respect of itself and for its directors and officers throughout the financial year. This gives appropriate cover for any legal action brought against the FRC or its directors or officers.

The company's Articles may be amended by a special resolution of the company members. The Articles were last amended in June 2026.

Related party transactions are disclosed in note 14 to the Accounts.

The FRC has a number of key contracts. However, the FRC performs several checks on the providers of these contracts, including financial health checks. As part of the FRC's Business Continuity Planning, scenario testing is undertaken in respect of the failure of one of the firms providing the key contracts.

The FRC is not a trading company. There have been no changes in the corporate structure.

The NAO, on behalf of the Comptroller and Auditor General, has expressed its willingness to remain in office. The Audit & Risk Committee reached the conclusion that the NAO has continued to perform the external audit in a professional and efficient manner and is deemed to be reappointed.

Approved by the Board of Directors on and signed on its behalf by:

CEO and Accounting Officer

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The Listing Rules require me to review the Directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the FRC's compliance with the provisions of the UK Corporate Governance Code specified for my review.

Based on the work undertaken as part of my audit, I have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or my knowledge obtained during the audit:

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•

Directors' statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 80;

•

Directors' statement on fair, balanced and understandable set out on page 80;

•

Board's confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 43 to 46;

•

The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on pages 40 and 41;

•

The section describing the work of the audit committee set out on pages 67 to 69.

•

•

•

•

•

•

•

•

•

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89

Eleanor Parker (Senior Statutory Auditor) For and on behalf of the

157-197 Buckingham Palace Road Victoria

London SW1W 9SP

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Registered number: 02486368

Income

Operating expenses

Finance charge

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Intangible assets

Property, plant and equipment

Trade and other receivables

Cash and cash equivalents

Trade and other payables

Lease liabilities

Dilapidation provisions

Lease liabilities

Dilapidation provisions

- General reserve

- Corporate reporting review legal cost fund

- General reserve

- Actuarial case cost fund

The financial statements and notes on pages 91-113 were approved by the Board of Directors on and signed on its behalf by:

Richard Moriarty Chief Executive Officer and Accounting Officer

Chair

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Comprehensive net income for the year

Comprehensive net income for the year

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93

Comprehensive income for the year

Adjustments for:

- Depreciation and amortisation

- Interest on lease liabilities

- Increase in dilapidation provisions

- (Increase)/decrease in trade and

other receivables

- Increase/(decrease) in trade and other payables

- Other non-cash adjustments

Net cash inflow/(outflow) from operations

Corporation tax paid

Purchase of property, plant and equipment and

intangible assets

7 & 8

Disposal of property, plant and equipment and

intangible assets

7 & 8

Payment of stamp duty

Payment of lease liabilities

Cash and cash equivalents at the beginning of

the period

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The FRC is a company limited by guarantee, incorporated in the United Kingdom. The company's registered office is 13th Floor, 1 Harbour Exchange Square, London, E14 9GE and its registered number is 02486368.

The ultimate controlling party of the FRC is the Secretary of State for the DBT.

The FRC has one subsidiary, the UKEB. It is a company limited by guarantee of which the FRC is the sole member. Its registered office is 13th Floor, 1 Harbour Exchange Square, London, E14 9GE. The subsidiary has not traded during the year and has no assets or liabilities. Therefore, it is not material to the financial performance and position of the FRC. Consequently, no consolidated set of financial statements has been prepared because they fall within the exclusions provided in section 405 of the Companies Act 2006.

The preparation of financial statements requires the use of estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although these estimates and associated assumptions are based on historical experience and management's best knowledge of current events and actions,

the actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an on-going basis.

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Property, plant and equipment are initially recognised at cost, including the purchase price, directly attributable costs to bring the asset to its intended use, and the estimated cost of dismantling and removing the asset, if applicable. After initial recognition, property, plant and equipment are carried at cost less accumulated depreciation at the reporting date. The FRC's threshold for capitalising property, plant and equipment is £1,000 (including irrecoverable VAT).

Office equipment

3 years

Fixtures, fittings & furniture

Leasehold improvements

Capitalised software and license

3 years

At the end of each reporting period, the FRC assesses whether there is any indication of impairment on assets, i.e. whether its carrying amount is higher than the recoverable amount. The recoverable amount is the higher of the asset's fair value less costs of disposal and its value in use. Any impairment losses are charged to the Statement of Comprehensive Net Income (SoCNI) and during 2025/26, the FRC did not recognise any impairment losses.

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•

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As set out in the Statement of Changes in Equity, equity comprises the general reserves (separating those that arose from actuarial activities) of the FRC and two costs funds.

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Preparers levy

Insurance and pension levies

Audit firms

Accountancy professional bodies

NAO and Crown Dependencies

Local audit

Third country audit

Actuarial profession

Publications

Government

XBRL taxonomy

Accountancy professional bodies

less cost awards recovered

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Staff and related people costs (note 5)

IT and facility costs

Lease expense

Depreciation and amortisation costs

External audit fees*

XBRL taxonomy development costs

Travel and conferences

Legal and professional fees

All other costs

Accountancy professional bodies

Less cost awards recovered

* The external audit fee of £108k (plus VAT) is for external audit services performed by the National Audit Office. It does not include any fees for non-audit services as no such work was undertaken during the year.

During 2025/26, the FRC had no corporation tax due (2024/25: £0).

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Salaries

Social security costs

Pension costs

Seconded staff and contractors

Fees paid to Board, Committee and Panel members

Other costs

Staff costs transferred to cases*

*

Based on staff time spent on enforcement cases recharged to the sponsoring RSB.

Strategy, Governance and Stakeholder Engagement

Corporate Services

Enforcement

Regulatory Standards

Supervision

UK Endorsement Board

*

Other category relates to agency staff, consultants and inward secondments where FRC is paying their costs.

†

This number is derived from an average number of staff employed across the year.

Fees (included in staff costs)

Other pension costs

Social security costs

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Cost at 1 April 2025

Additions

Disposals

Amortisation at 1 April 2025

Charge for year

Disposals

Cost at 1 April 2024

Additions

Disposals

Amortisation at 1 April 2024

Charge for year

Disposals

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Cost at 1 April 2025

Addition

Remeasurement

Disposals*

Depreciation at 1

April 2025

Charge for year

Remeasurement

Disposals*

*

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Cost at 1 April 2024

Additions*

Remeasurement**

Disposals***

Depreciation at 1

April 2024

Charge for year

Remeasurement**

*

**

Trade receivables

Prepayments

Accrued income*

Enforcement fines and cost awards

Other receivables

*

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Actuarial Case Costs Fund

Corporate Reporting Review Legal Costs Fund

General Accounts

*

Note 1(p) - Cash is subject to utilisation only upon receiving approval from Government.

Trade payables

Other taxation and social security

Accruals

Deferred income

Enforcement fines and cost awards

Other payables

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Balance at 1 April

Additions

Remeasurement

Finance charge

Lease repayments

Current

Non-current

Not later than one year

Later than one year and not later than five years

Later than five years

Discounted using the incremental borrowing rate

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Balance at 1 April

Additions

Remeasurement

Unwinding of discount

Current

Non-current

Not later than one year

Later than one year and not later than five years

Later than five years

Discounted using the incremental borrowing rate

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There were no related party transactions undertaken by key management personnel with the FRC during the year.

Fees & Staff Costs

Other pension costs

Social security costs

With the agreement of HM Treasury, DBT and the FCA, the FRC has, since 2008, taken the responsibility for collecting the UK contribution to the IFRS Foundation alongside its preparer's levy. The FRC acts as an intermediary collection agent and the amounts do not go through its financial statements. The FRC makes a small charge for providing this

service. As at the reporting date, the FRC raised £1,002,000 (2024/25: £921,000), of which

£12,000 (2024/25: £21,000) remained to be paid to the IFRS Foundation.

The directors of the FRC have undertaken to contribute a sum not exceeding £1 each to meet the liabilities of the Company if it should be wound up.

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The FRC does not accept any liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.

13th Floor, 1 Harbour Exchange Square, London, E14 9GE

Birmingham office: 5th Floor, 3 Arena Central, Bridge Street, Birmingham, B1 2AX

© The Financial Reporting Council Limited 2026

The Financial Reporting Council Limited is a company limited by guarantee.

Registered in England number 02486368. Registered Office: 13th Floor, 1 Harbour Exchange Square, London, E14 9GE

+44 (0)20 7492 2300

E03570234

ISBN 978-1-5286-6337-3