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FRC issues a further update responding to country and currency risk in financial reporting

Jun 19, 2012

The UK Financial Reporting Council (FRC) has issued a further ‘Update to Directors of Listed Companies: Responding to heightened country and currency risk in interim financial reports’. This is a follow-up to the report released in January 2012, issued because the FRC noted many good practices in country and currency risk reporting in annual reports submitted after the January update.

This Update aims to provide UK listed companies with issues that may occur when responding to the heightened economic uncertainty when preparing their interim financial reports. The Update notes the following issues to consider:

  • The company's exposure to country risk, direct or to the extent practical indirect, through financial instruments, and through exposure to trading counterparties (customers and suppliers);
  • The impact of austerity measures being adopted in a number of countries on the company's forecasts, impairment testing, going concern considerations, etc.;
  • The possible consequences of currency events that are not factored into forecasts but may affect reported exposures and sensitivity testing of impairment or going concern considerations; and
  • Post balance sheet date events that require enhanced disclosures to adequately inform investors and other users.

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