Corporate Reporting Review (overview)
Published: 25 September 2023
2 minute read
We review the annual report and accounts of public and large private companies, and certain other entities, for compliance with the law and other relevant reporting requirements. Our activities also cover the interim reports of some listed companies.
The FRC’s Corporate Reporting Review (CRR)
The Financial Reporting Council (FRC) reviews the strategic reports, directors’ reports and annual accounts (the annual report and accounts) and interim reports of companies included on the FCA’s Official List (eg companies listed on the Main Market of the London Stock Exchange), and the annual reports and accounts of UK-incorporated public companies (including those listed on AIM) and large private companies, for compliance with the Companies Act 2006 (the Act) and other relevant reporting requirements. Its remit also extends to the members' report and accounts of Limited Liability Partnerships (LLPs).
While, formally, it is the FRC Board that is charged with the corporate reporting review responsibilities on behalf of the Secretary of State, the day-to-day work is carried out by Corporate Reporting Review (CRR), an executive-led staff that may include contractors and secondees.
The Supervision Committee, which is a sub-committee of the FRC Board, is responsible for the oversight of CRR. The Supervision Committee and CRR may also seek advice from Senior Advisors and members of the Advisory Panel (independent, non-executive subject matter specialists), and staff from other parts of the FRC (eg lawyers and audit specialists), when performing the FRC’s statutory functions.
CRR’s principal activities
The directors of a company approve its annual report and accounts and are responsible for their accuracy and for the judgements, estimates and assumptions made in their preparation. The company’s auditors audit and report on the annual report and accounts. The FRC’s corporate reporting review work does not duplicate what directors or auditors do. It is the role of the FRC to enquire, through its CRR function, into cases where it appears that there is, or may be, a question whether the strategic report, directors’ report or annual accounts comply with the requirements of the Act. A similar division of responsibilities applies to a company’s interim report and to the members’ report and accounts prepared for an LLP.
To this end, the principal activities carried out by CRR are:
- developing and operating a programme of reviews of reports and accounts and interim reports, using an annually determined risk-based selection of companies that fall within its remit;
- entering into constructive engagement with companies whose reports and accounts or interim reports have come to its attention, whether through selection for review or through complaints, where it has been determined that there is or may be, a question whether they comply with the Companies Act 2006 (the Act) or other relevant reporting requirements;
- undertaking thematic reviews that focus on areas of corporate reporting where it is considered there is scope for improvement and which are of particular interest to stakeholders, with the aim of driving continuous improvement in quality through the identification of good examples of clear and concise disclosures.
- ensuring that, subject to any legal restrictions on sharing of information, any findings in respect of the corporate reporting of a company are brought to the attention of other authorities, including other parts of the FRC, so that they can decide whether they need to take any action within the scope of their remit and powers; and
- liaising with the Financial Conduct Authority (FCA) and other authorities in the United Kingdom and internationally to foster the consistent application of accounting requirements and to improve the quality of compliance of financial information with reporting requirements.
Neither the FRC Board, the Supervision Committee nor CRR offers advice on the application of accounting standards or the requirements of the Act. There is no system of pre-clearance for accounting treatments or other disclosures.
In carrying out their corporate reporting review work, CRR and the Supervision Committee aim to take a proportionate approach. The Supervision Committee maintains Operating Procedures which require that, as far as possible, any person involved in the review process seek to operate in accordance with the principles of good regulation as set out in the Regulators’ Code.
CRR and the Supervision Committee aim to ensure:
- timely but fair dealings with companies whose financial information comes under scrutiny;
- respect for the confidentiality of the process and the information provided by such companies, subject to the legitimate needs and responsibilities of other authorities; and
- appropriate public reporting of their monitoring actions.
Currently, only the strategic report, directors’ report and financial statements of a company, and the strategic report, energy and carbon report and financial statements of an LLP, are formally within the scope of CRR’s activities.
Note that, on this web page, the term “company” should be read to include all entities within the scope of our activities and that terms such as “board”, “audit committee” and “director” should be read to include the equivalent decision-making bodies and positions in overseas and non-corporate entities.