News December 2019 FRC announces its thematic reviews of corporate reporting and audit areas of focus for 2020/21

FRC announces its thematic reviews of corporate reporting and audit areas of focus for 2020/21

13 December 2019
The FRC has announced its 2020/21 corporate reporting and audit quality review programme.  
 
The FRC’s Corporate Reporting Review team will supplement its routine reviews of corporate reporting with four thematic reviews. These reviews will identify scope for improvement, as well as areas of better practices, in a number of areas of stakeholder interest. The FRC’s Audit Quality Review team has also signalled its areas of focus for audit monitoring.
 
In selecting corporate reports and audits for review, priority will be given to certain higher risk sectors. 
 
Thematic reviews of corporate reporting
 
The FRC will follow-up its recent report on IFRS 16 in interim reports by considering how a sample of companies apply IFRS 16 to their annual report and accounts. It will assess the extent to which the findings of its reviews of interim reports have been addressed. A ‘deeper dive’ will also be carried out into certain findings from the recent report into the application IFRS 15. The full list of reviews is:
 
  • IFRS 16: review of disclosures in the first year of implementation
  • Cash flows and liquidity disclosures 
  • IFRS 15: a deeper dive
  • The effects of the decision to leave the EU on companies’ disclosures.
 
The Corporate Reporting Review team will also contribute to a planned FRC-wide project focusing on climate change, by reviewing the relevant disclosures given in companies’ annual reports.
 
Areas of focus for audit monitoring
 
As part of the FRC’s audit monitoring programme, the AQR team expect to pay particular attention to the auditor’s work on:
 
  • Going concern and the viability statement
  • The Other Information in the Annual Report
  • Long-term contracts
  • The impairment of non-financial assets
  • Fraud risk
  • Application of new accounting standards (IFRS 15 & 16)
 
Priority sectors
 
Priority sectors are those considered by the FRC to be particularly high risk in terms of corporate reporting and audit by virtue of particular economic or other pressures. The corporate reports and audits selected for review by the FRC will have regard to the following priority sectors:*
 
  • Financial Services
  • Retail, including Retail Property and Travel & Leisure
  • Construction and Materials
  • Manufacturing
 
*The corporate reports and audits selected for review include but not are limited to entities in the priority sectors.
 

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