The Financial Reporting Council (FRC) has outlined its ‘top 10’ areas where improvements to reporting are required, including reporting on climate-related financial disclosures according to its latest report.
From next year premium listed companies will be required to disclose their compliance with the ‘taskforce for climate-related financial disclosures’ (TCFD) recommendations on a comply-or-explain basis.
According to the council it expects “material” climate change policies, risks and uncertainties to be included in narrative reporting and appropriately considered and reflected in the financial statements.
The FRC also said the quality of reporting “remained unchanged”, despite the impact of the Covid-19 pandemic, however significant non-compliance was found at 15 companies that were required to restate their accounts.
In line with FRC guidance, the council said most companies with December year ends reported the effects of the Covid-19 pandemic on their results and included additional information on key “forward-looking” judgements of interest to investors.
Sarah Rapson, executive director of supervision at FRC, said: “High quality reporting on important issues such as climate change and the Covid-19 pandemic are vital for investors and users of accounts so that they can make timely and informed decisions.
“Through our routine monitoring activity, we continued to identify basic errors in cash flow statements that should have been identified by companies’ own internal review processes. We expect to see improvements in this area in the future.”
She added: “Given the growing importance of climate risks and the need for high quality reporting in this area, the FRC will be closely reviewing how companies report against the new TCFD requirements.”