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FRC publishes year-end advice to preparers

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12 Dec 2014

The Financial Reporting Council (FRC) has published a letter containing year-end reminders for preparers of financial statements. It summarises recent changes to reporting requirements and some of the best practice guidance issued by the FRC during 2014.

The topics covered are:

  • The FRC's "Clear and Concise" initiative, launched in 2014 as the successor to the Cutting Clutter project.  Two items have been published under the aegis of this initiative in 2014: the FRC's Guidance on the Strategic Report, which gives best practice guidance on strategic report preparation; and Towards Clear & Concise Reporting, a report by the Financial Reporting Lab on practical steps taken by companies to improve the quality of their annual reports.
  • The September 2014 revisions to the UK Corporate Governance Code. Although these are only effective for years commencing on or after 1 October 2014, the FRC suggests that in the interests of good governance companies may wish to early-adopt some or all of the changes.
  • A message encouraging directors, management and auditors to consider the reasons for non-alignment between issues identified in the audit committee report in relation to the financial statements and risks of material misstatement discussed in the enhanced audit report.
  • The recently published Corporate Reporting Review Annual Report, which identifies common areas of challenge raised by the FRC's Conduct Committee and the areas that they think may be significant for next year-end.  It also highlights the fact that IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers have been recently published by the IASB and encourages companies to consider making appropriate disclosures on their likely impact (as required by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors) at the earliest possible stage.
  • The recently published Press Notice urging clarity in reporting of unusually complex arrangements with customers or suppliers.
  • The recently published Financial Reporting Lab reminders for the 2014 reporting season, which covers key findings from reports produced by the Financial Reporting Lab which companies should consider addressing during the 2014 reporting season.  It also notes that the Lab has an on-going project "Disclosure of Dividend Policy and Capacity" and suggests that companies may wish to look at the clarity of disclosures in this area, in the light of the letter written by investors to FTSE 100 Audit Committee chairs on this subject in October 2014.

The press release and full letter can be obtained from the FRC website.

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