Our mission and supporting strategies The FRC’s mission is to promote high quality corporate governance and reporting to foster investment.
Why have we landed on this mission? The capital markets are important to the health and growth of the economy. Our functions contribute to the effective functioning of the capital markets. We help ensure that investors have what they need to place their money with reasonable confidence that any risk is taken on an informed basis and managed as well as it can be. In turn, the entities in receipt of that investment can have the confidence to invest in their own strategies and work forces.
We believe that this confidence should be based on 

● Effective boards who communicate well 

● Robust and effective accounting, reporting, auditing and actuarial standards 

● Useful and reliable annual reports and accounts, assurance reports and other information produced by accountants and actuaries 

● Well regulated accountancy and actuarial professions Source: The FRC and its Regulatory Approach, January 2014, p. 1. https://www.frc.org.uk/Our-Work/Publications/FRC-Board/.
The-FRC-and-its-Regulatory-Approach.pdf New regime for very small companies A micro-entity preparing its financial statements in accordance with section 393(1A) of the Act shall prepare a balance sheet in which only those items listed in the following formats must be shown, where applicable:
Balance Sheet Format 1 A Called up share capital not paid B Fixed assets C Current assets D Prepayments and accrued income E Creditors: amounts falling due within one year F Net current assets (liabilities)
G Total assets less current liabilities H Creditors: amounts falling due after more than one year I Provisions for liabilities J Accruals and deferred income K Capital and reserves Source: Amendments to the Financial Reporting Standard for Smaller Enterprises (effective January 2015), FRC, April 2014, revision to section 2.40. https://www.frc.org.uk/Our-Work/Publications/Accounting-and-Reporting-Policy/Amendments-to-the-FRSSE-Micro-entities.pdf From 2016 the FRC will simplify the accounting framework for micro-entities in a new Financial Reporting Standard for Micro-Entities (FRSME).
Source: https://www.frc.org.uk/Our-Work/Publications/Accounting-and-Reporting-Policy/Consultation-Document-Accounting-standards-forsma-
File.pdf Corporate Reporting Review Smaller listed and AIM quoted companies 

● Our reviews of accounts produced by smaller listed and other entities often give rise to issues that are the result of the company not having sufficient or appropriate resource to recognise or address accounting questions. We tend to see straightforward areas of non-compliance, rather than management misjudgement of complex matters.
● We encourage the boards of the smaller listed and AIM quoted companies, in particular, to consider whether they have access to the level of technical resource and expertise needed to prepare corporate reports and accounts to an acceptable standard.

Discussion points 

1 The FRC explains its mission in terms of the functioning of the capital markets. Is that mission sufficient to ensure high quality in corporate financial statements?
2 The EU has directed member states to relax the accounting requirements for very small (micro)
companies. Is the balance sheet format set out in the second extract consistent with the mission and strategies of the FRC as set out in the first extract, and its findings on small companies as indicated in the third extract?