The UK Financial Reporting Council (FRC) published its annual review of reporting under the UK Corporate Governance Code, as companies prepare to implement the new code in 2025.
The review, according to an FRC news release, emphasises the importance of the code’s “comply or explain” approach, which allows companies to depart from provisions when circumstances warrant, provided they offer high-quality explanations for their alternative approach.
With the revised code taking effect from January 2025, the FRC was pleased to see companies preparing for those changes, the news release said. Companies are making good use of this flexibility, but the FRC noted that the quality of explanations for departures could still be improved and urged investors, proxy advisers, and service providers to support those companies.
“The FRC was encouraged to see several companies already outlining their preparation work for the new Provision 29 requirements,” the release said. “However, the review also highlights that these areas still require attention in some cases as the detailed analysis of 130 companies found that 25 failed to report, or report clearly, on the effectiveness [of] their internal controls.”
The regulator also issued an updated suite of factsheets on aspects of FRS 102, following a review of FRS 102 and other financial reporting standards.
“These factsheets will help preparers as they continue to consider the impact of the Periodic Review 2024 amendments on their financial statements,” the release said. Most of the amendments will become effective for accounting periods beginning on or after 1 January 2026.
IPSASB delivers pronouncements on mineral resources
To address gaps in its literature on mineral resources, the International Public Sector Accounting Standards Board (IPSASB) has issued IPSAS 50, Exploration for and Evaluation of Mineral Resources, and Stripping Costs in the Production Phase of a Surface Mine (amendments to IPSAS 12).
The new standard is intended to “provide guidance on accounting for the costs incurred in the exploration and evaluation of mineral resources”, a news release said, based on the selection of an accounting policy specifying which expenditure should be recognised as exploration and evaluation assets.
IPSAS 12 amendments aim to clarify when to capitalise costs incurred to remove waste material in surface mining operations as inventory or a noncurrent asset or both, the release added. The pronouncements align with previous requirements and guidance from the IFRS Foundation and the International Financial Reporting Interpretations Committee.
The effective date for both pronouncements is 1 January 2027, with earlier application permitted.
GRI and EFRAG progress partnership
As the next step in a cooperation between the Global Reporting Initiative (GRI) and the European Financial Reporting Advisory Group (EFRAG), organisations can now download the official Interoperability Index of the GRI Standards and the European Sustainability Reporting Standards (ESRS).
According to a news release, the index outlines how GRI disclosure requirements relate to the ESRS and reflects the data points in the three ESRS Implementation Guidance documents — to aid GRI reporters in meeting new reporting requirements in the EU.
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