Japan’s Pension Investment Fund expected to ramp up equity exposure

first_imgJapan’s Government Pension Investment Fund (GPIF), the world’s biggest retirement fund, is thinking to increase its allocation to domestic equities to approximately 30%, according to Nikko Asset Management.Hiroki Tsujimura, the company’s CIO in Japan, said many professionals within the fund had been discussing the ideal allocation for the asset class, and that the 30% figure “had been talked about”.The $1.2trn (€872bn) fund currently has a 21% allocation to domestic equities.“It is expected that GPIF should probably raise its allocation to domestic equities by approximately 5-10%,” Tsujimura said. Nikko Asset Management was one of eight fund managers selected by the fund last year to manage its foreign equity portfolio using MSCI Kokusai as benchmark.It was also named last month as one of 11 traditional active managers.GPIF is awaiting the outcome of a five-year Health Ministry review of public pension finances.Finance minister Taro Aso said last month changes to the Health Ministry’s plan for the GPIF would be discussed in June, when the government is expected to present another set of measures to boost growth.Investors are expecting the government to announce details of asset allocation targets and new investment approaches.The Health Ministry, which oversees the fund, has made key appointments to the fund, added new managers and styles, following recommendations from a state panel led by prime minister Shinzo Abe.A 10% increase will equate to the amount of Japanese equities purchased by foreign investors during the whole of last year, according to Tsujimura.The fund has a 55% allocation to domestic bonds, or Japanese Government Bonds (JGBs).The 10-year rate for JGBs is about 0.6%.GPIF is widely expected to allocate more of its funds to riskier assets including equity, infrastructure and private equity as pension obligations swell in the world’s oldest population.In February, the fund agreed with Canada’s Ontario Municipal Employees Retirement System and the Development Bank of Japan to invest in infrastructure projects through an investment trust fund.Since taking power in December 2012, Abe has pressed the GPIF to overhaul its portfolio, putting more money into domestic stocks and other riskier instruments to support his efforts to pull Japan out of more than a decade of deflation.“We now expect stock prices to appreciate and undervalued stocks to gradually disappear as the revival of Japan’s economy gather momentum,” Tsujimura said.last_img read more

UK government no longer on hook for BT Pension Scheme buyout

first_imgThe UK government has won its appeal against a ruling that would have forced it to fund an insurance buyout for the £40bn (€50.5bn) BT Pension Scheme (BTPS) in the event of sponsor insolvency.The Court of Appeal did, however, dismiss a second argument from the government that it should not be liable for pension scheme members who joined post-privatisation.BT, a previously state-owned telecommunications provider, was given assurances at privatisation by the government regarding the funding of its defined benefit (DB) pension scheme in the event of insolvency, known as the Crown Guarantee.However, these assurances were never clearly defined by the government of 1982, leading to confusion over to whom the guarantees were extended, and how much. In search for clarity, the BTPS, backed by sponsor BT, challenged the legal definition of the Crown Guarantee and the government’s belief that it only covered members of the BTPS at the time of privatisation.In 2010, the Royal Court of Justice (RCJ) ruled against the government and said it was to cover all BT employed members in the event that the telecommunications provider ceased operation.The Court also ruled, however, that the government should provide funding calculated on an insurance buyout basis, significantly more expensive than covering actuarial deficits or deficit recovery plans.Then taking the case to the UK Court of Appeal, the latest ruling diverged away from one RCJ finding and said the government’s guarantee would only extend to continuing deficit recovery payments already in place in scheme rules, over the buyout cost.This means, should BT become insolvent, the government would de facto become the sponsoring employer to the BTPS, providing deficit recovery payments.However, the UK government lost its second appeal, as the Court ruled the Crown Guarantee covers all BT employed members of the scheme, irrespective of privatisation.The legal implications of the ruling are still being considered by all parties, with no clarity over whether the BTPS will be allowed to remain as a standalone entity in the event of BT’s insolvency, or whether it would transfer to the Pension Protection Fund (PPF).It is understood the PPF is studying the Court’s ruling to ascertain probabilities of the lifeboat fund becoming responsible for the UK’s largest private sector DB scheme.It is also unclear whether the BTPS’ deficit, which was £5.9bn at the end of March 2013, would be carried onto the government’s balance sheet, given the inherent guarantee.When contacted by IPE, HM Treasury declined to comment on the case.Complications regarding BTPS’s relationship with the PPF extend further, as the scheme was previously exempt from paying the expected levy of the fund, implicitly based on the fund technically being public sector with a Crown Guarantee.However, telecommunication rivals of BT challenged this, and the European Commission ruled the fund could not be exempt from the PPF levy.On the ruling, BT said it was considering the ruling, including the possibility of an appeal to the Supreme Court, the final court of appeal for the UK.A spokesman for the BTPS said the trustees would review the judgement and highlighted the possibility that all three parties – scheme, sponsor and government – would appeal the ruling.“It is important to remember the Crown Guarantee is only relevant in the highly remote circumstances that BT becomes insolvent,” they added.A spokesman for the Pensions Regulator, whose objectives include protecting the PPF, said: “Subject to any appeals, we will consider the issues and what this may mean for the regulation of the pension scheme.”last_img read more

BlackRock doubles money on Paris property sale to Norges Bank

first_imgAt the time, the mixed-use property – then known as Les Trois Quartiers, had 4% vacancy.MGPA refurbished both the office entrance and retail space.BlackRock said, in the last five years, new retail and office leases had been signed with eight tenants including Chanel, Visa and C&A.When MGPA’s Europe Fund III, part of the Global Fund III, bought the asset, it used €140m of debt from Deutsche Postbank and Landesbank Hessen-Thuringen-Girozentrale, as well as €30m in vendor finance from the seller.Hammerson, the UK REIT that sold the property, had valued it at €275m at the end of 2008, six months before the sale.The transaction provides the Norwegian fund, advised by Norges Bank Investment Management, sizeable exposure to the central Paris market in a single deal.With trophy assets increasing in popularity across Europe, purchases by traditionally longer-term capital could reduce the amount of liquidity in the prime commercial real estate sector, with owners ‘sitting’ on their assets for longer periods.BlackRock’s acquisition of MGPA in October last year created a combined $23.5bn (€17.5bn) platform. A BlackRock opportunistic fund – formerly MGPA – has sold a central Paris property to the Norwegian Government Pension Fund Global for €425.6m.The Madeleine building was sold by BlackRock’s Europe Property Fund III five years after its €210m purchase.BlackRock inherited the 31,000 sqm building when it took control of MGPA last year.Jean-Philippe Olgiati, BlackRock Real Estate France director, said the 2009 acquisition was made “when there was little liquidity in the market”.last_img read more

Irish pensions levy ‘kept alive’ to fund protection scheme, suggests lawyer

first_imgThe Irish government may well have extended the current 0.6% pensions levy to prepare for the launch of a pension protection fund, a pensions lawyer has suggested.Jamie McConville, partner at LK Shields in Dublin, said it was “hard not to make some kind of connection” between the government’s extension of the pensions levy, at 0.15% for two years, and the potential for a Waterford Crystal High Court hearing to result in further compensation claims by members of the insolvent company’s pension fund.The matter, which is soon to be discussed by the Labour Relations Commission, could still be heard in the High Court, following a ruling against the Irish government by the European Court of Justice (ECJ) that found the state was in “serious breach” of its obligations to protect scheme benefits.Following the ECJ ruling, Ireland changed the priority order upon wind-up, allowing for active and deferred members to have greater security of benefits, while also confirming that those subject to benefit losses after a double insolvency will be compensated by the state. However, McConville said the problem was that the minimum funding standard (MFS) for defined benefit (DB) funds was increasingly perceived as “quite weak”, especially in light of a recent court ruling that saw trustees of the Omega Pharma scheme granted an additional €2.23m contribution, despite the fund meeting the statutory minimum requirements.“If the courts are not seeing the minimum funding standard as necessarily being the key benchmark, it seems to me difficult for that to be ignored by courts in the future, in a case such as Waterford Crystal where they are having to assess what is an adequate level of compensation,” he said.He speculated that it was “entirely possible” the High Court would deem a set percentage of accrued benefits being guaranteed, as currently allowed under the revised priority order, as insufficient when it came to a verdict in the Waterford Crystal case.“Then, two questions arise,” McConville said. “What is a sufficient level and how is the cost going to be met?“I wonder if the fact the pension levy is being kept alive beyond this year, albeit at a lower level of 0.15%, is perhaps for the possibility of future funding of a pension protection fund in mind.”Ireland introduced a four-year, 0.6% pensions levy in 2011, with proceeds funding general expenditure.In last year’s Budget, the government introduced a new, 0.15% levy that would overlap with the final year of the previous duty, then continue as a standalone charge until 2015.In 2013, the 0.6% levy raised €520m, with the additional charge expected to increase earnings by €135m.The sum compares favourably with the £695m (€865m) levy income for the UK Pension Protection Fund predicted for the current financial year, despite the UK’s pension assets, at close to £1.2trn, dwarfing Irish pension assets of €86bn, based on the income of the pensions levy.last_img read more

​UK foundation Wellcome Trust prices first euro bond

first_imgThe initial order book was seven-and-a-half times oversubscribed.Bank of America Merrill Lynch, JP Morgan and Morgan Stanley acted as joint lead managers of the issue.Wellcome spends more than £700m each year on its mission of improving human and animal health, largely through funding biomedical research and supporting education.The proceeds of the bond issue will be used for the trust’s research activities, allowing it to reinvest more of the returns from its investment portfolio.Returns on the trust’s investment portfolio have been 10% annualised over 10 and 20 years.Over the past five years, they have totalled 75%, with a positive return for each year.For the year to 30 September 2014, the portfolio delivered returns of 15.4%.This performance was made up of double-digit returns in each major asset class, and represents the third successive year of double-digit portfolio performance.The Wellcome Trust is currently rated Aaa (stable) by Moody’s and AAA (stable) by Standard & Poor’s, and said it was its policy to maintain these ratings.The trust initially issued bonds in sterling in 2006, the first UK charity to do so.Successive sterling bonds were issued in 2009 and 2014.Danny Truell, CIO at Wellcome Trust, said: “These bonds represent our inaugural issuance in euros, and we are delighted to be able to extend access to our strong balance sheet to a broader investor base.“We believe we are the first independent charity to issue long-term euro debt, and it is testament to the strength of our financial position that we have seen such strong demand for these bonds.”He added: “It has been our strategy to review market conditions regularly and to access the bond markets when circumstances are appropriate.“We are pleased to be able to include the euro bond market in this ongoing assessment of opportunities for the trust.” The Wellcome Trust – the UK’s largest charitable foundation, with an endowment of £18bn (€23.5bn) – has priced €400m worth of bonds with a maturity of 12 years, falling due in 2027.The issue – the trust’s first in euros – is priced at a spread over mid-swaps of 40 basis points. Wellcome said the final coupon of 1.125% was the lowest ever for an Aaa/AAA-rated corporate in the euro bond market.It is also the lowest ever coupon in the euro bond market for a corporate issuance with a tenor of more than 10 years.last_img read more

South Yorkshire returns 14% despite shift to short-duration bonds

first_imgJohn Hattersley, fund director at South Yorkshire Pensions Authority (SYPA), which runs investments and administration for the scheme, said the fund’s pursuit of short-duration bonds had affected the overall performance.However, he added: “[The scheme was] mindful of the detrimental effects lower yields were having on the deficit, but also well aware of the potential capital loss of an increase in yields to overall return.’The scheme’s best results came from its US and Japanese equity holdings, which returned 25.3% and 24.9% respectively, while falling short of benchmark targets.North American equities accounted for a third of the 41% international equities bucket, with Japanese holdings claiming an 8% share of the international portfolio.UK equities, which account for 19.1% in assets, returned an above benchmark 7.1% over 12 months to March, with the scheme adding a low-volatility strategy during the year.Its 2.3% absolute return strategy returned 8.8%, five percentage points above the benchmark.However, this did not stop the scheme agreeing to reduce its allocation to the strategy in favour of more “specialist and income orientated vehicles”, which Hattersley said would be introduced this year.The 20.4% fixed income portfolio, the majority of which is invested in UK index-linked bonds and a quarter in corporate bonds, returned 18.5%.Hattersley said SYPF had nevertheless decided to overhaul from its conventional corporate bond strategy, and move towards a more suitable buy-and-maintain strategy, overseen by Royal London Asset Management.A 4.3% allocation to private equity returned 19.3%, well above its 2.4% benchmark.Real estate returned 13.1%, 3.8 percentage points below benchmark, and accounted for 10.8% of the fund’s portfolio.“The Fund’s commercial real estate portfolio performed well,” Hattersley said, “although the overall property return suffered because of a disappointing agricultural valuation and the adverse currency effect on the European fund holdings.”The scheme did not change asset allocation radically over the year, however, it will now move to a new customised benchmark after it underwent an asset and liability review. The £6.3bn (€8.6bn) South Yorkshire Pension Fund (SYPF) returned 14% up to April 2015, despite its changing exposure to short-duration bonds hampering its return strategy.The pension fund for public sector workers in the south of Yorkshire began shifting towards a short-duration bond strategy over concerns a rise in interest rates would significantly affect asset valuation.The local government pension scheme’s (LGPS) 14.2% return was 20 basis points below its benchmark after fixed interest bonds and property, which returned 18.5% and 13.1% respectively, were not as buoyant as expected.Its overall return was significantly higher than the 5.7% seen in 2013/14.last_img read more

Bulgarian government drops bombshell on second-pillar pensions

first_imgThese changes, notes the BASPSC, show the lack of an overall concept of pensions protection, have created instability in the pensions industry, including discouraging investors, and generated uncertainty and insecurity for insured members.The pensions association’s statement says it is ready to offer various types of payout mechanisms, including variable and guaranteed rates, and lump-sum pensions.But it insists the final decision should be up to individual members, as was the case in 2015, when members were allowed to switch between the first and second pillars.The BIA added that the common payout pool proposal renders the concept of personal pensions savings meaningless.It called for the draft to be tabled before the National Council for Tripartite Cooperation, the governmental, trade union and employers’ organisation advisory council.The objectors are also furious about the way the draft was slid into the legislative agenda.It was published late on Friday, 22 April, with a three-week consultation period that covered weekends and the Orthodox Easter public holidays, with even relevant ministers unaware until then of the document.This, they claim, is reminiscent of the government’s rushing through controversial changes to the pensions system in 2014, shortly before Christmas.The objectors have called for any discussions, let alone decisions, to postponed until after the asset quality reviews and stress tests of the pensions sector have been completed.The remit of the reviews in any case overlaps with the finance ministry’s proposals on issues such as investments and risk management.The reviews themselves were recently postponed until July, and will not be completed until December.Yesterday, Bulgaria’s Financial Supervision Commission published a list of eight approved independent external reviewers for the pensions sector. Bulgaria’s pensions sector is up in arms following a set of draft amendments to the Social Insurance Code (SIC) published by the finance ministry on its website.While many of the suggestions are uncontroversial, covering long-standing issues such as investment by funds in related parties, the ministry dropped a bombshell by proposing a common payout asset pool for second-pillar fund retirees that would prevent them from passing their savings on to their heirs.Both the Bulgarian Association of Supplementary Pension Security Companies (BASPSC) and the Bulgarian Industrial Association-Union of the Bulgarian Business (BIA) have published strongly worded objections to the minister’s proposals.Both have objected to the continuing piecemeal amendments to the SIC – 45 times since 2010 and 117 times since its implementation – which make it among the most altered pieces of Bulgarian legislation.last_img read more

German discount rate disparity seen as ‘unconstitutional’

first_imgEighty percent of German companies surveyed by Mercer want the treatment of pension liabilities for tax purposes and statutory accounting to be aligned, with some experts declaring the gap unconstitutional.The consultancy surveyed a random selection of 80 of its corporate clients in December 2016. It said 94% thought the difference between the discount rates was unfair and 83% thought a harmonisation of the two rates was either “important” or “very important”. The vast majority (87%) also supportedaddressing the gap within the next five years.In addition, 80% said the discount rate used for calculating liabilities under Germany’s main accounting standards (HGB) should be adopted as the rate used for calculating liabilities for tax purposes.The discount rate for tax purposes (“steuerlicher Rechnungszins”) affects companies offering on-book-pension promises (or direct promises, “Direktzusagen”), which represent a large portion of German pension liabilities – around €285bn in 2014. The rate has been 6% for decades, while the HGB discount rate has been steadily declining: as at the end of 2016 the HGB rate was 4.01%. Mercer said the different rates effectively penalised companies choosing to pay pensions directly from their balance sheets, as they have to report higher profits in their tax accounts than in their statutory accounts. This put them at a disadvantage over companies implementing a different pension model, or offering no occupational pensions at all, according to Mercer.Thomas Hagemann, chief actuary at Mercer in Germany, said pension liabilities were “artificially understated” as a result.The disparity has been a source of disgruntlement for those companies affected for some time, but Hagemann told IPE that the issue has become more important as the difference between the discount rates has grown.“Now, because of the sustained interest rate development – the HGB rate is steadily falling and will go even lower – the differences are so large that the principle of parity between the rates isn’t satisfied anymore,” Hagemann said.Asked about the prospects for change, Hagemann said there were some signs that the government may eventually be prepared to make some adjustments, but this was really only a faint light at the end of the tunnel.Arguably more notable, according to Hagemann, was that some experts viewed the disparity as unconstitutional.He pointed in particular to comments made by Johanna Hey, a prominent tax lawyer, who Hagemann said has looked at the issue in the most depth and made this argument most explicitly.The Mercer survey showed that although there is dissatisfaction among companies about the different discount rates, on-the-book pension promises are not being written off as a model of pension provision.More than a third of respondents believe that the different treatment of pension liabilities for tax purposes does not make the Direktzusage route for occupational pensions less attractive. Almost a quarter (24%) were prepared to expand or introduce this type of pension provision if the discount rate for tax accounting is aligned with the HGB rate.In a statement Hagemann said that these results do not square with recurrent talk about on-book pension promises being on their way out.However, “the tax discrimination” was a barrier to the expansion of this type of pension provision and the government, whose reform proposal is aimed at boosting occupational pension coverage, should act on this soon, he added.last_img read more

MEPs stick with IORP II delegated acts in vote on sustainability proposal

first_imgPaul Tang, Dutch MEP and ECON rapporteur on “disclosures relating to sustainable investments and sustainability risks” proposalTang added: “The report voted today strengthens the disclosure requirements of financial products, and more importantly, asks from investors to carry out a due diligence on their investment decisions.“This means that institutions can no longer hide behind their clients to justify investment at odds with sustainability goals. Investors will now be required to avoid, mitigate, and report on the sustainability risks produced by their investment products.”ShareAction’s Choidas said the committee’s vote “set a very high level of political ambition” for the next steps of the Commission’s sustainable finance action plan.She added that the “evolving understanding” of the material impacts of and on investments was a “crucial component” of the committee’s text.“We believe this regulation has set the wheels in motion for a more socially just and environmentally sustainable financial system, by proposing such an understanding of what constitutes sustainability risk,” Choidas said.Next stepsMEPs will now begin negotiations with the European Council, the body for member states, as part of what is known as the “trilogue” process.These negotiations could begin next year, according to an EU official. She said technical work on all three of the Commission’s legislative proposals was ongoing within the Council, with the disclosure proposal the most advanced.The objective was to reach an agreement on the Council’s negotiating position by the end of the year, she said. Matthies Verstegen, senior policy adviser at PensionsEurope, said delegated acts were “a prescriptive legislative tool aimed a harmonisation, which cannot take account of the diversity in the European pensions landscape”.“Pension funds increasingly look to align their investments with the values of their members and society at large,” he said. “However, we are disappointed the amendment to remove the delegated acts in IORP II from the proposal was narrowly defeated.”PensionsEurope is still to discuss the result of the ECON vote with its members.The pension fund bodies also argued against changes to IORP II as the directive was still under implementation – member states have until mid-January to transpose it into national law.The directive includes new requirements related to environmental, social and corporate governance (ESG) factors that have yet to be put into practice and evaluated. However, Eleni Choidas, EU policy manager at ShareAction, a London-based responsible investment advocacy group, said it was “very pleased that the Commission has been empowered to adopt delegated acts on IORP II”.“With this empowerment, the Commission has received a tall order to ensure that all pension savers have their long-term interests taken into account by their trustees, and to ensure their money is invested sustainably,” she added.Expansion of ESG requirementsThe rules adopted by MEPs appeared to shift the focus to include the social and environmental impact of investments, as well as the effects of social and environmental issues on investments.This was at least partly linked to the introduction into the legislative text of a requirement for “due diligence” and the definition of sustainability risks.“Under the new rules,” said the European Parliament’s Socialist and Democrats group, which led the ECON vote, “investors and asset managers will be required to include [ESG] considerations in their decision-making processes and carry out due diligence on their investment decisions.” Members of the European Parliament have decided to allow delegated acts under IORP II in a vote on one of the Commission’s sustainable finance proposals, despite pension fund opposition.The decision was taken as part of the vote in the parliament’s economic and monetary affairs committee (ECON) on its version of the Commission’s proposal on “disclosures relating to sustainability investments and sustainability risks”.Paul Tang, the MEP charged with developing the parliament’s response to the Commission’s proposal, had suggested scrapping the provision for delegated acts under the EU occupational pension fund directive, but this amendment was defeated in the ECON vote earlier this week.PensionsEurope, the EU’s main pension fund lobby group, lobbied against the delegated acts for IORP II, with groups such as aba, the German pensions association, and Eumedion, the Netherlands-based corporate governance and sustainability forum for institutional investors, also opposing the provision.last_img read more

Accounting roundup: Guidance issued on pension equality costs

first_imgAn influential group of UK accountants has issued guidance on dealing with challenges created by the requirement to equalise legacy pension benefits for men and women in some defined benefit (DB) schemes.The Pensions Research Accountants Group (PRAG) has been working on the impact of equalising “guaranteed minimum pension” (GMP) payments following a UK High Court ruling in October that has already had a significant impact on DB pension liabilities.The guidance was prepared by the PRAG’s Statement of Recommended Practice (SORP) working group.PRAG SORP chairman Kevin Clark said: “The paper sets out a practical approach for determining the need to accrue or disclose based on materiality considerations and the ability to reliably measure backdated costs. The paper also provides suggested to disclosures for the different scenarios schemes may face.” Last October, the High Court ruled that GMP payments were subject to EU equality laws even though they were based on the UK’s state pension, which is paid out to men and women at different ages.Although the ruling concerned DB schemes sponsored by Lloyds Banking Group, lawyers and consultants said it could affect thousands of schemes and payments going back over nearly 30 years.It also meant that scheme sponsors were faced with the challenge of estimating a large additional DB liability in the run-up to the accounting year end.This latest guidance means that sponsors could disclose an estimate of the likely accounting liability or a statement explaining that the issue will be addressed in a later accounting period. A number of employers have already done this.Any assessment of the liability would be subject to a materiality assessment, the PRAG said in statement.IPE has collected data from 165 UK DB schemes with combined liabilities of more than £507bn (€590bn). Between them, the aggregate bill for GMP equalisation stands at just under £2.3bn, or 0.45% of total liabilities.Biggest GMP bills (£m)Chart MakerEstimated GMP bills as a percentage of liabilitiesChart Maker Further readingAnalysis: UK pension equality costs ‘lower than forecast’ Hymans Robertson estimates that the final bill for GMP equalisation will be far less than the estimates published last year by other consultancy groupsHybrid pension plansThe Accounting Standards Board of Canada (AcSB) has released a summary document detailing a number of possible research avenues for the International Accounting Standards Board (IASB) to explore in relation to the accounting treatment of hybrid pension plans.The researchers, drawn from Canada, Germany, Japan and the UK, proposed separating the DB and defined contribution (DC) components within a hybrid pension promise and accounting for each separately.They also suggested that the IASB should conduct further research into accounting for guaranteed elements within hybrid plans or, alternatively, develop a free-standing measurement approach for this group of plans.Last July, senior staff from AcSB urged the IASB to examine the issue more closely.They said: “Our findings point to the need for further guidance on accounting for hybrid pension plans to better reflect their economic characteristics and reduce diversity in practice.”The AcSB work on hybrid pension plans covers a wider range of issues than the IASB’s existing research project into pension benefits that depend on an asset return.The IASB planned to consider the results of its research findings “in the near future”, the AcSB said in a statement.UK parliament inquiry into the future of auditcenter_img Meanwhile, the Business, Enterprise and Industrial Strategy committee (BEIS) of the UK’s lower house of parliament has issued a damning report calling on the government to break up the so-called ‘big four’ audit firms by forcing them to spin off their audit work from their consultancy businesses.The committee’s report stated: “We are not confident in relying solely on the integrity of auditors to do the right thing in the face of conflicting interest.”It also described the audit sector as “the route to milking the cash cow of consultancy business”.In a statement, the UK’s audit watchdog, the Financial Reporting Council, said: “The FRC shares a number of the concerns expressed in the… report which are consistent with the evidence we submitted to its inquiry.“Long term fundamental changes to the regulation of audit form part of the implementation programme we are developing with BEIS.”FRC draft plan and budget 2019The release of the report comes as the FRC seeks public comments on its draft corporate plan and budget for the coming year.Among its priorities for the next 12 months is the transition from the current audit oversight regime to the new Auditing, Reporting and Governance Authority.Alongside this transition, the FRC said it also planned to step up its work to improve audit quality, improve corporate reporting, and focus on Brexit-related issues such as EU auditor accreditation.The consultation document also revealed that the FRC was readying itself “voluntarily to apply Freedom of Information provisions to all our work prior to formal designation as a public authority”.The announcement could potentially cast light on the FRC’s approach to the supervision of audit firms during the 2008 financial crisis.last_img read more