The watchdog has said that the draft reflects its ‘continued commitment’ to serve the public interest whilst also moving at pace towards building the enhanced capacity and capability necessary to transform into the new Audit, Reporting and Governance Authority (ARGA).

The FRC said that over the past year it has strengthened its supervision of audit firms to promote better audit quality, taken the first steps towards operational separation of their audit businesses, set up a competition policy team and created a new stakeholder engagement and corporate affairs function.

Moving forward, the FRC said it will continue to develop a solid foundation on which to expand further. As the UK moves beyond its exit from the EU, the FRC will also support the set-up and staffing of the UK Endorsement Board (UKEB) for IFRS.

Sir Jon Thompson, FRC CEO, said: “Last year we set out a strategy to take the FRC through a period of significant transformation to create ARGA. Our transformation programme has proceeded with vigour, delivering reform which is not dependent on legislation, and developing the policy and resourcing options where legislation is required. By maintaining momentum as we deliver on our strategy, our intention is to create ARGA, fully formed, as soon as the legislation permits.

“In this Plan and Budget, we have assumed a further two-year transition period to the creation of ARGA in 2023. We will also be reviewing and implementing a new funding model, ahead of it being put on a statutory footing. We look forward to engaging with stakeholders on the detail of ARGA’s funding proposals in due course.”

In 2021/22 the FRC expects costs to increase by £6.8m, almost half of which funds the organisation’s development and maturity, and half the establishment of the UK Endorsement Board (UKEB) following the UK’s exit from the EU.

The 2021/22 Strategy and Plan & Budget consultation will run until March 12.