Auditors reporting questioned by FRC for AIM listed companies
The Financial Reporting Council’s annual review of corporate reporting reveals that it approached nearly 4per cent of the companies whose reports it reviewed for further information or explanations. The majority of these were smaller organisations that will be targeted under the FRC’s project for promoting clear and concise reports.
The reports were criticised for their poor quality and it was stated by the FRC that some financial statements that were submitted required further clarification to meet with their strict standards for clear and concise reporting.
However, it is not all bad news for Auditors, the FRC stated that corporate reporting by large public companies – particularly those in the FTSE 350 – is generally of a high standard.
There were over 271 reports reviewed by the FRC along with accounts relating to the year to 31 March 2014. It then approached 100 companies (37 per cent) for further information and explanation.
“The CRR Annual Report identifies the areas likely to pose future areas of challenge for preparers and where finance directors and audit committee members should particularly focus when planning their next report and accounts,” said Richard Fleck, chair of the FRC’s financial reporting review panel.
Areas that boards should focus on in the next reporting season included:
- Assessing the accounting effect of any changes in the structure of pension arrangements.
- Analysing the effect of new accounting standards that will apply in the next few years in important areas such as consolidation and revenue.
- Taking account of the FRC’s press notice on “exceptional items”.
- Improving the quality of disclosure of critical judgments and estimates around accounting policies.
- Identifying all the relevant intangible assets arising in recently acquired businesses.
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