FRC publishes Annual Review of Corporate Reporting
News types: Corporate Reports
Published: 24 September 2024
The Financial Reporting Council (FRC) has today published its Annual Review of Corporate Reporting setting out the findings of its monitoring of UK companies’ annual report and accounts alongside its expectations for the upcoming reporting season.
The report is an important resource for preparers and auditors of financial statements, investors and other stakeholders.
Overall, the FRC is pleased that the quality of reporting in the FTSE 350 has been maintained, and that there have been improvements in several reporting areas, with provisions and contingencies falling out of the ‘top ten’ issues for the first time in over five years. This year the FRC also questioned significantly fewer companies in relation to their disclosure of judgements and estimates, another area that has featured in the top ten for many years.
The FRC was however disappointed that there has been an increase in the number of restatements in relation to impairment of assets and cash flow statements, predominantly in companies outside the FTSE 350, where we are seeing some evidence of a widening gap in quality. These will remain areas of close focus for the FRC. Companies and their auditors may reduce the risk of challenge by closely reviewing the FRC’s findings to avoid similar breaches of reporting requirements in future.
The FRC will continue to take a proportionate and targeted approach to its monitoring to ensure companies comply with the relevant reporting requirements. The FRC does not expect companies to provide information in their annual reports and accounts that is not material or relevant to users.
In relation to sustainability reporting, the FRC was pleased that, given the complexities for reporters, there were comparatively few compliance issues in premium-listed companies’ reporting against the Taskforce for Climate-related Financial Disclosures (TCFD) framework.
The FRC’s Executive Director of Supervision, Sarah Rapson said:
While it is pleasing that the quality of corporate reporting has been maintained, a widening quality gap between FTSE 350 companies and other companies is concerning. Companies outside the FTSE 350 are important to economic growth and good quality reporting improves trust in business and supports investment and growth.
To address the concerns highlighted in this year’s annual review, companies should clearly familiarise themselves with the FRC’s top ten reporting issues and focus on providing material disclosures that are clear, concise, and company specific. Companies should also note that good quality reporting does not necessarily require a greater volume of disclosure.
Read the Annual Review of Corporate Reporting 2023/24.
Listen to the latest FRC In Conversation podcast episode, where Kate O’Neill, Director of Stakeholder Engagement and Corporate Affairs, and Geoff LeGouais, Corporate Reporting Review Case Director, discuss the review’s purpose and the key findings from a year of corporate reporting.
The FRC will be hosting a webinar to discuss the key findings from the Annual Review of Corporate Reporting 2023/24 on Thursday 17 October 2024. Register your place now.