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Companies (Audit, Investigations and Community Enterprise) Act 2004

Section 16 - Grants to bodies concerned with accounting standards etc

88.Section 256(3) of the Companies Act 1985 allowed the Secretary of State to make grants to bodies concerned with the making and enforcing of accounting standards.  The Secretary of State has paid grants under this section in respect of the work of the FRC and its companion bodies, the ASB and the FRRP.

89.Following the FRC's assumption of the functions of the Accountancy Foundation, its annual running costs will be broadly shared by Government, business and the professional accountancy bodies (with the exception of the costs of disciplinary cases, which will continue to fall to the professional accountancy bodies; and the costs of an independent audit inspection unit which will be borne by audit firms).

90.Section  16 replaces section 256(3) of the Companies Act 1985 to allow the Government to contribute to the funding of any of the activities of a body which carries out the activities specified in subsection (2).  It is expected that the FRC will be the body to whom a grant will be made.  Subsection (4) makes clear that a grant can be paid to a body in respect of activities carried out by its subsidiary, or any body established under the constitution of its subsidiary (such as a Board or a Panel).

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