The Financial Reporting Faculty looks ahead at the issues facing preparers and users of UK GAAP and IFRS accounts and outlines its plans for the coming year to support its members.
Watch our short video on the faculty’s resources and how to find them.
Accountants in the spotlight
Recent high-profile corporate failures have meant that the accountancy profession and the reliability of audited accounts have come under increasing scrutiny. Upholding the quality of financial reporting has never been more important.
First and foremost, accounts must be prepared in accordance with the applicable requirements. As well as the major update to FRS 102 as a result of the Triennial Review and a new leasing standard for IFRS reporters coming into effect for December 2019 year-ends, there are new requirements for the Directors’ Report and Strategic Report. In particular, companies need to check whether they are within the scope of the new requirement to prepare a section 172 report and, if so, ensure that they are familiar with its content. The faculty has a wealth of resources to guide you through these changes.
But good practice involves more than just strict adherence to the rules. The FRC has highlighted the importance of transparency and good quality reporting for promoting trust in business, particularly in times of uncertainty. Our resources offer practical advice on good financial reporting practice. Visit icaew.com/frfac for access to the factsheets, webinar recordings and much more.
Most businesses are aware of the increasing focus on climate change and the desire of a wide range of stakeholders to see relevant disclosures in the accounts. As practice evolves, the faculty brings together existing guidance and the experience of experts to provide practical tips on preparing climate-related financial disclosures. You can find out more at icaew.com/climate
The UK will be leaving the EU on 31 January. Although the stated intention of government has been to ensure that laws and rules currently in place (including the Companies Act 2006 and related regulations) continue to apply as far as possible, there will be changes to company law and therefore to some reporting requirements. The faculty will be issuing new and updated guidance to bring clarity regarding the implications of Brexit for different types of reporting entity. Resources are available at icaew.com/brexit
The bigger picture
The ‘future of corporate reporting’ has been an ongoing debate for many years. With increasing demands for information by wide groups of stakeholders, questions are being asked about whether the current format and scope of the annual report and accounts remain fit for purpose. This is the focus of a major FRC project, with a discussion paper setting out a vision for the future expected later this year.
Big questions are also being asked by the IASB, for example, around how information is presented in financial statements, as well as other tricky subjects such as goodwill and impairment. The recent Brydon report also makes a number of recommendations relevant to corporate reporting, for example, around ‘true and fair’ and capital maintenance. While some of these matters are still at an early stage, important decisions lie ahead, with the potential for significant changes to corporate reports in coming years.
The faculty is actively engaged with these discussions and we welcome views from members. Comments can be sent to email@example.com.