The Financial Reporting Council (FRC) has published its ‘Annual Review of Corporate Reporting’, which reveals the authority’s ‘top ten’ areas where improvements to reporting quality are needed.
Changes have been recommended so account users have a clearer understanding of a company’s performance and position.
Before the 2020/21 reporting cycle, firms will be expected to produce higher quality reports against the backdrop of Covid-19 and increased economic uncertainty.
In the past year, the FRC reviewed 216 accounts and wrote to 96 companies with substantive questions about their report, with 14 companies being required to restate their accounts in instances where significant non-compliance occurred.
Upcoming examination of annual reports will focus on disclosures addressing risk, judgement and uncertainty in the face of the ongoing impact of Covid-19, Brexit and climate-related risks.
David Rule, the FRC’s executive director of supervision said: “Companies have a key responsibility to prepare high quality annual reports to ensure investors, shareholders and other users can make timely and informed decisions. We expect companies to improve their reporting in the ‘top ten’ areas we identify.”
He added: “Given the heightened need for high-quality disclosures as a result of the Covid-19 pandemic, it is vital companies carefully consider the FRC’s findings ahead of the next reporting cycle.”