In its Annual Review of Corporate Reporting 2020–21 the FRC identified ten areas where improvements to reporting are required. These include reporting on judgements and estimates, revenue, and cash flow statements.
The FRC's executive director of supervision, Sarah Rapson, said the regulator "continued to identify basic errors in cash flow statements that should have been identified by companies' own internal review processes".
The FRC also published its end-of-year bulletin of key matters for preparers, which sets out the regulator's focus for the coming year.
From next year, premium listed companies, which are subject to more stringent governance requirements, will be required to disclose their compliance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations on a comply-or-explain basis, the FRC said.
The regulator said it also expects material climate change policies, risks, and uncertainties to be included in narrative reporting and appropriately considered and reflected in the financial statements.
Rapson said: "Given the growing importance of climate risks and the need for high-quality reporting in this area, the FRC will be closely reviewing how companies report against the new TCFD requirements."
For its annual review, the FRC reviewed 246 reports and accounts, which was a 14% increase over 2020. It also wrote to 97 companies with substantive questions about their reports.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.