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FRC announces thematic reviews for 2017/2018

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15 Dec 2016

The Financial Reporting Council (FRC) has today announced the thematic reviews that it will undertake in 2017.

The thematic reviews announced today, and which are included within the FRC’s Draft Plan and Budget and Levy Proposals 2017/8, are areas where the FRC see scope for improvement and where there is particular shareholder’s interest. 

Within the areas of corporate reporting the FRC will undertake thematic reviews in the following areas: 

  • Significant accounting judgements and sources of estimation uncertainty.
  • Pension disclosures.
  • Alternative Performance Measures (APMs).  This will be the second thematic review into the use of APMs in annual reports and accounts following its first report into their use in interim statements in November 2016

The FRC has indicated that it will write to companies prior to their year-ends informing them that it intends to review disclosures in their next published reports and to specify the topic to be reviewed. 

The aim of this monitoring activity is “to drive continuous improvements in the quality of corporate reporting and to identify good examples of clear and concise disclosures”.  Examples will be shared with other companies to help them raise the quality in their corporate reporting. 

The FRC will also review and report on companies’ disclosures in relation to the following areas for any report reviewed in 2017:

  • The impact of new IFRSs; including the timeliness and usefulness of the information provided.
  • Principal risks and uncertainties relating to Brexit and the low interest rate environment and the extent to which they are company specific. 

These reviews will build upon its Annual Review of Corporate Reporting 2015/2016, published in October 2016, and its thematic review of APMs published in November 2016. 

Within the area of audit, thematic reviews will be conducted in the following areas in order to “drive continuous improvement in the quality of audit”:

  • Auditor’s responsibilities for areas of the annual report beyond the financial statements;
  • Audit firm culture and governance; and
  • Materiality, updating on the 2013 thematic review

In addition to the thematic reviews, noted above, the FRC will also focus its corporate reporting review and audit monitoring activity on the reports and audits in the priority sectors of:

  • Property
  • Travel and leisure.
  • Support services.

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