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FRC publish reminders for half-yearly and annual financial reports following the EU referendum

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12 Jul 2016

The Financial Reporting Council (FRC) has published some high-level guidance for directors to consider when preparing their forthcoming half-yearly and annual financial reports.

The guidance highlights some key considerations for those preparing financial reports in light of the recent UK vote to leave the EU:

  • Business model: disclosure of the company’s business model should include detail of the main markets in which the company operates and enable the reader to assess the company’s exposure to the outcome of the referendum.
  • Principal risks and uncertainties: consideration should be given to the nature and extent of risks and uncertainties arising from the referendum result and the impact of these on the future performance and position of the business. There should be a focus on making any disclosures company-specific and on avoiding the use of boilerplate language which is less useful to users of the report. Directors should also consider whether the referendum result gives rise to any solvency, liquidity or other risks that may threaten the long-term viability of the business, including the impact of these on their viability statement.
  • Market volatility: balance sheet values as at 30 June 2016 and subsequent reporting dates may be impacted by volatility in the markets following the referendum result. Particular consideration should be given to financial instruments measured at fair value and discount rates that may be affected by changes in foreign exchange rates, interest rates and market prices. Directors are also encouraged to consider whether assets may be impaired or whether any subsequent event disclosure is required.
  • Going concern basis of accounting: consideration should be given as to whether the going concern basis of accounting is appropriate.
  • True and fair view: in light of the EU referendum result, directors should consider the need for any additional disclosures to ensure that the accounts give a true and fair view.
  • Half-yearly financial reports: in their interim reports listed companies must include disclosure of important events that occurred during the first six months of the financial year in addition to an indication of the impact of those events on the interim financial statements.

Click here to access the full guidance on the FRC website.

Click here to access the Deloitte website dedicated to the EU referendum.

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