Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether she has plans to introduce new financial reporting requirements for (a) arms-length bodies and (b) Non-Governmental departments that handle significant public expenditure.

For arms-length bodies, inclusive of non-departmental public bodies, the legal authority to direct financial reporting requirements for their individual Annual Reports and Accounts is with its sponsoring department.

HM Treasury’s Financial Reporting Manual (FReM) applies directly to all government departments. Sponsoring departments may also require their arms-length bodies, including non-departmental public bodies to apply the FReM.

Financial reporting requirements outlined in the FReM are updated annually, the 2025-26 FReM has been published which will apply to relevant bodies for the 2025-26 financial year. The FReM is based on International Financial Reporting Standards-adapted or interpreted as appropriate to the public sector context.

Under section 24 of the Government Resources and Accounts Act 2000, the Treasury is required to consult an advisory group on financial reporting principles and standards for resource accounts and Whole of Government Accounts. This role is fulfilled by the Financial Reporting Advisory Board (FRAB) who are required to agree to any changes to the financial reporting requirements included in the FReM. Reporting requirements would then apply to government departments directly as well as those arms-length bodies and non-departmental public bodies directed to follow the FReM by their sponsoring department.