The Financial Reporting Council (FRC) has unveiled its areas of supervisory focus for 2022/23, in relation to corporate reporting reviews and audit quality inspections.
The FRC’s supervision corporate reporting review team will supplement its routine reviews of corporate reporting with six thematic reviews.
The six areas include, TCFD reporting and climate-related reporting in financial statements, business combinations issues relating to compliance, earnings per share and deferred tax, with a particular focus on disclosures around deferred tax assets and whether the evidence supporting the recognition of deferred tax assets for losses is “sufficiently robust”.
These reviews will aim to identify scope for improvement, as well as examples of “better practice”, in areas of key stakeholder interest.
The team will also pay particular attention in its reviews to areas including climate-related risks, fraud risks, and cash and cash flow statements.
Furthermore, in selecting corporate reports and audits for review, the FRC will give priority to
travel, hospitality and leisure, retail, construction and materials, as well as gas, water and multi-utilities sectors which are considered to be “higher risk”, for corporate reporting and audit, by virtue of economic or other pressures.