FRC Alerts Directors to Corporate Reporting Challenges Arising From Current Economic Conditions
In response to the current financial situation, the Financial Reporting Council (FRC) has published the following documents:
The purpose of the documents is to assist directors by identifying key questions that they may wish to consider when preparing for the year-end and in meeting their responsibilities in relation to annual reports and accounts. These documents do not impose any new requirements on companies or their auditors.
The FRC update on going concern brings together the key accounting requirements and the disclosures relevant to going concern and liquidity risk and sets out the main points of interaction between the judgments made by directors and auditors. The update highlights the challenges for all of the parties involved:
The update also notes that the absence of confirmations of bank facilities does not of itself necessarily cast significant doubt on a company’s ability to continue as a going concern nor necessarily require auditors to refer to going concern in their reports.
The FRC has also published the results of a study of companies’ disclosures on going concern and liquidity risk, with conclusions and recommendations for improvements.