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FRC announces thematic reviews for 2018/2019

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20 Nov 2017

The Financial Reporting Council (FRC) has announced the thematic reviews that it will undertake in 2018/19.

The thematic reviews, which will supplement the FRC’s routine monitoring work, will cover “certain aspects of corporate reports and audits where there is a particular shareholder interest, and scope for improvement and learning from good practice”.

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

The FRC has indicated that it will write to 40 smaller listed and AIM quoted companies prior to their year-end, informing them that it will review two specific aspects of their next published report and accounts. These specific aspects will be drawn from five areas of FRC focus that have featured in recent thematic reviews or Financial Reporting Lab reports.

The FRC will also review and report on companies’ disclosures in December 2017 reports in relation to the future impact of IFRS 16 Leases and will also review June 2018 interim reports of a number of companies in industries whom it expects that IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial instruments will have the most material impact.

Within the area of audit, thematic reviews will be conducted in the following areas:

  • Transparency Reporting: A comparative analysis of transparency reports of firms with public interest entity (PIE) audits.
  • Audit Quality Indicators (AQIs): An assessment of the development and use of AQIs by UK audit firms, which will draw heavily on international best practice.

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

  • financial Services, with particular emphasis on banks, other lenders and insurers;
  • oil and gas;
  • general retailers; and
  • business support services.

It will particularly focus on:

  • first and last year audits;
  • the audit of fair value investments, including goodwill impairment;
  • the nature and extent of the use of auditor’s experts and specialists; and
  • the approach to the audit of controls.

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