FRC applauds new reporting requirements
July 26th, 2023
The Financial Reporting Council (FRC) has welcomed the UK government’s draft statutory instrument on corporate reporting, which introduces new requirements for companies.
The new rules will require companies to introduce an annual resilience statement, to set out how it is managing risk and building or maintaining resilience over the short, medium, and long term.
Companies will also have to produce a triennial audit and assurance policy statement. In the statement, they will explain how they propose to assure non-financial reporting over the following three years, as well as an annual update on the implementation of the policy.
Two other annual statements – one on a company’s distributable profits and policy on distributions and another on steps taken to prevent and detect material fraud – will also be required under the new rules.
The draft rules are subject to amendment during their passage through the House of Commons and the House of Lords. If approved, they will come into force from the start of 2025.
The requirements only apply to companies with at least 750 employees and an annual turnover of £750 million or more.
Mark Babington, FRC executive director of regulatory standards, said: “These enhanced reporting requirements will strengthen transparency and accountability in business by providing key information to investors and other stakeholders. The new resilience statement, in particular, will give valuable insight into how companies are building resilience amidst current economic challenges.”
The government has proposed these measures as a response to lessons learned from major and sudden corporate collapses in recent years, including that of public sector outsource firm Carillion.
The FRC will consult separately on non-statutory guidance to companies about good practice in complying with the new reporting statements required by the regulations. This is set to be published before the requirements come into effect.
The publication of the draft rules follows the FCA postponing the release of its final Sustainability Disclosure Requirements until Q4 2023.
Last Updated: 26 July 2023