The Financial Reporting Council has today published a report of the findings of the Financial Reporting Review Panel (FRRP) in relation to its review of reports and accounts in the year to 31 March 2012 in which:
326 sets of accounts were reviewed.
130 companies were approached for further information or explanation.
The Panel found the general quality of reporting to be good. There was evidence of improvement in the reporting of principal risks and uncertainties. The reporting of mitigating actions, in particular, was considered to be done well.
The Panel also welcomed early signs that some boards were reconsidering the presentation of their financial information to focus on key messages. It was pleased to see evidence of boards eliminating unnecessary detail and giving greater prominence to material disclosures. A few had also changed the order of content to assist shareholders’ understanding of their company’s business, policies, performance and position.
As in previous years, the Panel continued to be concerned about the quality of the reports and accounts of some smaller listed and AIM quoted companies with whom it raised more potentially substantive issues and which took time to resolve satisfactorily. The directors of such companies should not underestimate the importance of their legal responsibility to prepare accounts that comply with the law and accounting standards.
Commenting on the findings and recommendations, Richard Fleck, Chairman of the FRRP and Conduct Committee said:
"The Panel was encouraged by the continued willingness of boards to hold constructive and open dialogue with the Panel. They have responded well to suggestions as to how they might improve the quality of their reports by focussing on key messages. That co-operation is central to the effectiveness of the UK model of enforcement."
Notes to editors:
The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
On 25 June 2012, the FRC’s Reform Programme received parliamentary approval, following which the statutory responsibility and powers relating to the review of reports and accounts was given to the Conduct Committee of the FRC with effect from 2 July 2012. Prior to this date this role was performed by the Financial Reporting Review Panel (‘the Panel’).
For further information about the work of the Conduct Committee and the FRRP, please visit the FRC’s website at http://frc.org.uk/Our-Work/Conduct/Corporate-Reporting-Review.aspx
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