The Financial Reporting Review Panel has announced that its review activity in 2008/09 will focus on the following sectors:

• Banking
• Retail
• Travel and leisure
• Commercial property
• House builders

Sectors are chosen by the Panel following a risk-based assessment and discussion with the Financial Services Authority and the FRC’s Standing Advisory Group, an independent committee which comments on the Panel’s proposals.

Banking, commercial property and house builders have replaced utility, telecommunications and media as focus areas. Travel and leisure and retail have been retained.

The Panel will pay particular attention to disclosures relating to financing arrangements and risks and uncertainties in the light of credit market conditions at the time of approval of financial statements.

Accounts will continue to be selected from the full range of companies within the Panel’s remit, including the largest companies, but there will be a shift in emphasis away from the FTSE 350 to the lower end of the listed market, AIM and large private companies. Accounts will continue to be selected for review on the basis of company specific factors and complaints.

Announcing the proposal, Bill Knight, Chairman of the Panel said:

“The priority sectors are the areas in the economy that are currently under strain. We are shifting the emphasis away from the FTSE 350 towards the mid-tier companies where risk is seen to be greater. Recent Panel reviews have shown that compliance is good at the top end of the listed market.”

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Committee on Corporate Governance, the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board).
2. The role of the Panel is to examine the annual accounts of public and large private companies to see whether they comply with the requirements of the Companies Act 1985 (‘the Act’), including applicable accounting standards. Following implementation of the Accounting Regulation (EC) No. 1606/2002, this may mean compliance with UK or International Financial Reporting Standards.
3. Where breaches of the Act are discovered the Panel seeks to take corrective action that is proportionate to the nature and effect of the defects, taking account of market and user needs. Where a company’s accounts are defective in a material respect the Panel will, wherever possible, try to secure their revision by voluntary means, but if this approach fails the Panel is empowered to make an application to the court under section 245B of the Companies Act 1985 for an order for revision. To date no court applications have been made.
4. The Chairman of the Panel is Bill Knight and the Deputy Chairman, Ian Brindle. There are currently 29 other Panel members drawn from a broad spectrum of commerce and the professions. Individual cases are normally dealt with by specially constituted Groups of 5 or more members.
5. All Press enquiries and consultation responses should be directed to: Carol Page tel: 020 7492 2460 or at c.page@frc-frrp.org.uk