March 23, 2026 The FRC’s focus for 2026: what the CEO’s statement signals for boards, auditors and governance professionals
The FRC has opened 2026 with a clear articulation of what it sees as its core priorities for the year ahead. Richard Moriarty’s latest statement is measured, reassuring and intentionally practical. What sits beneath it, though, is a regulator that sees its role differently than a few years ago: establishing a forward-looking think tank function through its launch of a new Innovation and Improvement Hub, and being more attuned to the balance between reducing burdens and maintaining trust, empowering SMEs to bolster economic growth.
For the organisations we support, the interesting question is not what the FRC plans to do, but what the tone of this announcement means for governance, reporting and audit in the year ahead.
A regulator leaning into economic growth, not away from it
The FRC has been careful to position itself not as a brake on economic activity but as a contributor to growth by reinforcing trust in UK corporate reporting. This latest statement takes that further. Investor confidence and proportionate regulation are given equal prominence.
From a governance advisory perspective, this alignment helps boards justify investment in high-quality reporting and internal controls even at a time of cost pressure. One FTSE 350 audit committee chair recently put it to us this way: the price of capital is influenced as much by confidence in reporting as by the financials themselves. The FRC appears to agree.
Where this becomes practically relevant is in how boards respond to proportionate reporting expectations. Many organisations, particularly outside the listed sector, still default to “more disclosure equals better disclosure.” Many companies now publish annual reports exceeding 200 pages. The FRC’s commitment to reduce burdens, including recent cuts to guidance volumes, is a prompt to revisit whether annual reports have grown bloated through habit rather than need.
The long-awaited statutory footing still shapes the narrative
It is clear that the FRC sees the Government’s renewed commitment to a statutory footing as a significant sign of confidence.
This matters operationally. Organisations sometimes ask whether they should delay system improvements until the regulatory architecture is finalised. The FRC is nudging firmly against that instinct. Its message is that it has already evolved and will continue to evolve, and that engagement should proceed on today’s expectations rather than hypothetical future structures.
At Elemental, we see the most successful organisations taking this incremental approach: strengthening governance step by step rather than waiting for a moment of legislative clarity that could take years to materialise.
Audit regulation is moving, but not in a single direction
Two initiatives are highlighted in the FRC’s statement: the Future of Audit Supervision Strategy and the End-to-End Enforcement Review. Both aim at a more system-focused approach. That signals a shift away from purely firm-level interventions towards understanding how audit processes and structures collectively affect quality.
For boards and audit committees, this could translate into more questions on how they oversee the audit ecosystem rather than simply the auditor relationship. In practice, this may mean deeper conversations about how management prepares information, how risks are articulated, and where governance bottlenecks occur.
For auditors, the FRC’s plan to publish new guidance for SMEs is perhaps the most immediately impactful development. Many smaller firms have long argued that the audit regime is overly shaped by large-company expectations. If the new guidance helps auditors calibrate work more appropriately to scale and complexity, it may reduce friction between auditors and clients and lead to more predictable audit planning.
A realistic example we see regularly: an SME with a lean finance function is subjected to testing expectations designed for a multinational audit. The resulting gaps, tension and cost often obscure rather than illuminate risk. The FRC’s forthcoming guidance suggests a more grounded approach may soon be possible.
Innovation and preparing for future technology
The reference to the Innovation and Improvement Hub’s work on AI is short but important. For the organisations we support, the immediate question is not whether AI will transform audit tomorrow but whether their internal processes are mature enough to benefit from change when it comes. Fragmented data, unclear ownership of reporting sections and manual reconciliation processes all limit the value of future technology, regardless of the tool.
A year that asks for thoughtful governance rather than dramatic change
The FRC’s priorities for 2026 read as steady and purposeful rather than radical. Yet the steady themes are precisely those that will shape board agendas this year: ensuring investor confidence, reducing unnecessary burdens, improving audit quality and preparing for future trends in reporting.
For the clients we advise, the message that resonates most strongly is the call for proportionate, evidence-based governance. This aligns with what we increasingly see in practice: boards wanting clarity, companies wanting predictability, and auditors wanting frameworks that reflect the businesses they are auditing.
Moriarty’s statement does not announce sweeping new obligations, but it sets expectations for maturity. Organisations are encouraged to streamline reporting, strengthen internal processes, and approach compliance not as an administrative requirement but as a way to support long-term resilience.
The FRC is inviting businesses into a more collaborative relationship. The task for governance teams through 2026 is to respond with the same balance of discipline and pragmatism, ensuring structures are solid enough for scrutiny but flexible enough to support growth.
To explore how your organisation can respond proportionately and pragmatically to the FRC’s direction of travel, please contact us. Visit here to find out more about our corporate governance services.
