Review of reporting by the UK’s largest private companies
News types: Company Specific, Publications, Corporate Reports
Published: 31 January 2024
The Financial Reporting Council (FRC) has today published its review of reporting by the UK’s largest private companies.
Overall, the quality of reporting was mixed, particularly in terms of how clearly companies explained material matters that were complex or judgemental.
Large private companies are economically significant to the UK, providing a substantial number of jobs and supporting extensive supply chains. High quality reporting of key matters is important for users of their annual report and accounts
Key findings that companies and their auditors should take into account for future annual reports are:
- The best strategic report disclosures focused on the matters that are key for an understanding of the company. These were explained in a clear, concise and understandable way that was consistent with the disclosures in the financial statements. Good quality reporting does not necessarily require greater volume.
- Better examples of judgement and estimates disclosures included detail of the specific judgement involved and clearly explained the rationale for the conclusion. The significance of estimation uncertainty was much more apparent when sensitivities were quantified.
- Accounting policies for complex transactions and balances were often untailored, providing boilerplate wording. Entity-specific policies are particularly critical for revenue, where the better examples explained the nature of each significant revenue stream, the timing of recognition and how the value of revenue was determined.
Read the thematic review.