The UK’s Financial Reporting Council (FRC) has announced that in 2017 it will carry out a number of targeted thematic reviews of company reporting and audit on issues it knows to be of shareholder interest and where weaknesses have been identified.
In respect of corporate reporting the FRC said it would be writing to companies prior to their year-end, informing them that it will review disclosures in their next published reports, specifying the topic under review. The issues it will focus on are significant accounting judgements and sources of estimation uncertainty; pension disclosures and alternative performance measures (APMs).
Additionally the FRC said that when reviewing any report published in 2017 it would monitor and report on companies’ disclosures relating to the impact of new IFRSs; including the timeliness and usefulness of the information provided and on the principal risks and uncertainties relating to Brexit and the low interest rate environment and the extent to which they are company specific.
In respect of its review of audit the FRC said it focus on auditors’ responsibilities relating to other information; audit firm governance and culture and materiality which would update its review on this in 2013. The FRC said it will consider the six largest audit firms’ policies and procedures and will review a number of audits in these specific areas to make comparison with a view to identifying both good practice and scope for improvement.
In addition to these thematic reviews, the FRC said would, in its routine corporate reporting and audit monitoring activities, give some priority to reports and audits in the property, travel and leisure and support services sectors. Audit monitoring will additionally also focus on the financial service sector, the regulator said.
Audit monitoring will pay particular attention in the audits reviewed to changes in auditor appointment, audit of pension balances and disclosures and the audit of impact of currency fluctuations, the FRC added.
Last Updated: 17 December 2016