News June 2016 Smaller quoted companies should continue to report under IFRS for consistency and comparability agre

Smaller quoted companies should continue to report under IFRS for consistency and comparability agree respondents

30 June 2016

In Update on the discussion paper: Improving the Quality of Reporting by Smaller Listed and AIM Quoted Companies (PDF), the Financial Reporting Council (FRC) summarises the feedback to its report on the quality of reporting by smaller quoted companies and set outs progress against its proposals.

  • urged the FRC to avoid imposing additional regulatory burdens on smaller quoted companies;
  • agreed that International Financial Reporting Standards (IFRS) should continue to be used by small and large quoted companies alike;
  • welcomed the proposal to issue annual reminder letters aimed at smaller quoted companies highlighting key areas of focus for investors;
  • encouraged the development of practical guidance for audit committees on evaluating the adequacy of the finance function and process; and
  • strongly supported the proposal to explore ways to provide more focussed and practical support for preparers through training and CPD regimes.
The update follows the publication by the FRC last year of a discussion paper on improving the quality of reporting by smaller listed and AIM quoted companies.

In that paper, the FRC reported that smaller quoted companies believe investors pay little attention to their annual reports and hence do not prioritise their preparation. However investors say annual reports do matter to them, particularly because there are fewer analysts’ reports in that segment of the market.

Paul George, FRC’s Executive Director for Corporate Governance and Reporting, said,

“Overall feedback from respondents was generally supportive of the measures we proposed in our discussion paper. Good progress has been made on implementation and we will continue to focus on the issues raised in the discussion paper to play our part in ensuring high quality company reporting is achieved by smaller quoted companies.”

Notes to editors:
  1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We are the UK competent authority for audit and set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent enforcement arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.