The Financial Reporting Council (‘FRC’) publishes an Annual Review of Corporate Reporting, which describes the activity and findings of its Corporate Reporting Review function for the 12-months to 31 March. The aim of the review is to help companies improve their corporate reporting by highlighting key improvement areas and matters on which companies should focus in the coming year.
In its Annual Review of Corporate Reporting 2022-23 the FRC has reported the findings from its monitoring activities, together with its expectations for the coming reporting season. It reviewed 263 company reports and wrote to 112 companies with questions about their accounts. Following FRC enquiries, 25 companies were required to restate aspects of their accounts.
The most frequently raised issues identified by the FRC related to impairments, and judgements and estimates. This reflects the ongoing economic uncertainties companies need to factor into their financial reporting and the need for detailed explanations to help users understand the positions taken. The FRC also continued to identify a significant number of issues with cash flow statements, resulting in seven companies restating their results.
As part of the ongoing audit and corporate governance reform programme, the FRC extended its monitoring work to include reviews of directors’ remuneration reporting for a selection of ten companies. As a result, the FRC wrote to nine of those companies on matters mostly relating to the clarity of these targets and performance against them. In addition, the FRC continued with its ongoing reviews of corporate governance disclosures against the Corporate Governance Code.
On climate-related reporting, it is clear companies are at very different stages of maturity. As reporting practices become more established, it is more likely the FRC will enter into substantive correspondence with companies where their disclosures do not meet requirements for TCFD reporting.
The FRC’s Executive Director of Supervision, Sarah Rapson said:
“During periods of economic uncertainty, it is especially vital that companies provide users of annual reports and accounts with decision-useful information.
“While the overall quality of company reporting we have seen remains consistent, companies should continue to familiarise themselves with FRC findings and expectations to ensure they are providing high quality disclosures.”
To read the full FRC Report click on the link.