FRC calls for better reporting of liquidity and going concern disclosures
The call follows a recent review by the council of companies’ viability and going concern disclosures which found there were ‘several areas’ where reporting could be improved
The Financial Reporting Council (FRC) has called on businesses to improve their reporting of liquidity, solvency, longer-term viability and going concern disclosures.
The call follows a recent review by the council of companies’ viability and going concern disclosures which found there were “several areas” where reporting could be improved.
The council said that “clear and comprehensive disclosures” on these matters were “particularly important” given the backdrop of the Covid-19 pandemic which caused greater uncertainty for some companies.
The report added that “uncertainties” that impact viability or going concern should be “clearly explained” to stakeholders.
As well as making improvements in these areas the FRC said companies should also maintain a focus on providing more informative company specific disclosure which is “clear and concise and avoids unnecessary clutter”.
Mark Babington, executive director of regulatory standards, said: “High-quality viability and going concern disclosures are vital for investors and other users of accounts to help them make informed decisions about a company’s liquidity, solvency and longer-term viability. This is particularly important during times of uncertainty and economic volatility.
“Companies should carefully consider the review findings with a view to improving their viability and going concern disclosures in their upcoming annual reports and accounts.”
