FRC announces thematic review and priority sectors for 2023/24

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20 Dec, 2022

The Financial Reporting Council (FRC) has announced its areas of supervisory focus for 2023/24, including high priority sectors, for corporate reporting reviews and audit quality inspections.

The FRC’s Supervision Division will supplement its routine reviews of corporate reporting with four thematic reviews: 

  • IFRS 17 Insurance contracts:  The FRC will review a selection of insurers’ 2023 interim accounts to identify compliance with IFRS 17 and examples of good disclosures.
  • Large private companies: The proposed change to the definition of a Public Interest Entity will bring an enhanced regulatory focus on the largest private companies.  The FRC will review a selection of private companies’ annual reports to identify whether and where there are areas of poor compliance with reporting requirements with a view to informing its monitoring activities going forward. 
  • Task Force on Climate-related financial Disclosures (TCFD) – metrics and targets:  Following the FRC’s thematic review of TCFD disclosures in 2022 which highlighted room for improvement in many companies’ metrics and targets disclosures, the FRC will undertake a targeted follow-up in 2023, with a focus on the metrics and targets disclosures of companies from four relevant sectors. The FRC will also consider how adequately these companies’ net zero commitments have been addressed in their financial statements.
  • IFRS 13 Fair value measurement:  The FRC’s review will focus on companies in the non-financial sector, and will provide an overview of the disclosure requirements of the standard, highlighting examples of better disclosure and common pitfalls.

The audit thematic reviews will focus on the topics of sampling, hot reviews, network resources and service providers and root cause analysis.

The FRC's Supervision programme of audit quality inspections will pay particular attention to the auditor’s work in the following areas:

  • Going concern.
  • Fraud risks.
  • Climate-related risks, including the linkage between the audited financial statements and climate-related disclosures elsewhere in the Annual Report.
  • The application of the revised Auditing Standard on risk identification and assessment (ISA (UK) 315).

In selecting corporate reports and audits for review, the FRC will give priority to travel, hospitality and leisure, retail and personal goods, construction and materials and industrial transportation. 

A press release is available on the FRC website.

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