In response to questions received around the applicability of the section 172 reporting requirements to medium-sized companies, the FRC identified a few areas where the appendices in the Guidance on the Strategic Report would benefit from clarification.  As a result it has issued editorial amendments which primarily relate to the scope of the new requirements which are effective for annual reporting periods beginning on or after 1 January 2019. The editorial amendments have been made to:

• Clarify the scope of the section 172(1) statement in the Strategic Report including a clarification that all public companies (including AIM companies) must include a section 172(1) statement in their Strategic Report, even if they meet the medium sized company size criteria.  For non-public companies, the clarifications indicate that the requirements only apply to large companies (as defined in s465 to 467 of the Act). 
• Clarify that when determining whether a company has to disclose matters regarding employee engagement under Schedule 7.11(1) of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, in the Directors' Report, consideration must be given to the number of UK based employees in both the current and preceding year, unless a company is in the first year of operation. 
• Remove Public Interest Entities from the scope of the requirement to disclose trends and factors in the Strategic Report.  The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, removed this requirement for Public Interest Entities (PIEs).  The requirement still remains in place for quoted companies with less than 500 employees.

A press release, including a summary of the amendments are available on the FRC website. 

Our related Need to know publications on the The Companies (Miscellaneous reporting) Regulations 2018 and the revised 2018 guidance on the strategic report are available on this website.