The FRC’s annual plan and budget for 2014/15 announced the launch of a project to evaluate and plan how it might assist smaller listed and AIM companies to address the quality of their reporting so as to improve confidence in the integrity of their financial statements and of the market as a whole. Such companies are important to economic growth. Greater confidence in their governance and reporting will help them grow even more strongly. This responds to concerns expressed over a number of years about the quality of reporting in this sector.
Aim of the project
The project is aimed at achieving over a three year period, a step change in the quality of reporting of smaller listed and AIM companies. We will target improvements by these companies in order to underpin confidence in the quality of reporting in the market as a whole and help foster investment in smaller listed and AIM companies. The first phase of the project will initially gather and assess evidence of the root causes of the challenges and explore ways in which we can support companies to make improvements. The second phase will look to implement possible supporting actions and the final phase will be to assess whether the quality of reporting has improved as a result.
In order to identify the root causes the FRC is carrying out a number of different activities:
Reviewing a sample of annual reports under our normal operating procedures.
Reviewing the audit procedures at relevant audit firms with respect to the processes and procedures for reviewing smaller companies’ financial statements.
Meeting with key stakeholders including investors, fund managers, banks, non-executive directors, NOMADs and preparers of reports.
Consideration of the governance arrangements at smaller companies.
We are particularly interested in hearing views from both preparers and users of annual reports, both to understand the challenges smaller companies encounter when preparing their annual reports and to obtain input on what might help smaller companies to improve the quality of their reporting. If you would be interested in contributing to this project please contact:
Phil Fitz-Gerald, Head of Supervisory Inquiries, Conduct Division: firstname.lastname@example.org
Anna Colban, Project Manager, Codes & Standards Division: email@example.com