The Financial Reporting Council (FRC) has today published the Corporate Reporting Review (CRR) Annual Report for 2013
covering reviews conducted in the year to 31 March 2013. The CRR finds that, while reporting by larger companies remains at a good level, reporting by some smaller listed or quoted companies suffers from a lack of sufficient or appropriate resource. As a result the FRC will consider actions to strengthen reporting in this area as part of its 2014/15 plan.
The CRR’s assessment of the current state of corporate reporting in the UK is based on reviews of 264 sets of accounts selected from the full range of companies within its remit. 91 companies were approached for further information or explanation.
A company’s key messages should be readily apparent to readers of its annual report and accounts. The CRR was therefore disappointed that few boards appeared to have followed the initiative shown by those who, last year, reviewed their accounts to ensure that key messages were highlighted and supported with relevant, concise disclosures.
The report advises boards to consider carefully where there is scope for directors’ judgement in the application of accounting standards. The CRR will continue to challenge companies where the exercise of judgement appears to have resulted in aggressive accounting.
This year’s report adopts a new approach by providing an overview of the main issues encountered during the year, including illustrative case studies. A more detailed technical presentation
identifying outcomes of the CRR’s work to accompany the report is also published today. The report also highlights steps the CRR is taking to enhance its effectiveness.
Commenting on the findings and recommendations, Richard Fleck, Chairman of the FRC’s Conduct Committee said:
"We operate in an environment where reputation is enhanced by transparency and openness supports integrity. It is important that boards are willing to hold open and constructive dialogue with investors and respond well to suggestions for improvements to the quality of their reports.”
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.
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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