UK: market conditions and the challenges for corporate reporting - FRRP annual report

The Financial Reporting Review Panel has published its annual report with regard to its reviews of reports and accounts for the year to 31 March 2008. The main purpose of the report is to provide guidance for those preparing accounts in the future. It therefore includes comments from the Panel on the challenges for corporate reporting presented by the so-called "credit crunch".  In this regard, the report identifies several issues which are of particular relevance:

• Selection of accounting policies.
  
• Disclosure of management judgments and estimation uncertainties.
  
• Sufficiency of descriptions of revenue recognition policies.
  
• Consolidation.
  
• Principal risk and uncertainty disclosure in the business review. 
  

With regard to its review of accounts and reports, the Panel noted in its report:

... the current standard of corporate reporting in the UK is good. The areas of reporting that prompted most questions were those dealing with more complex accounting issues or where the exercise of judgement by management is most critical. The Panel did not identify any systemic issues requiring immediate remedial action.

The Panel published two press notices in the year in respect of companies that had failed to comply with the requirements of the Act. These companies restated comparative amounts in their next set of annual and half-yearly financial statements ... 88 companies undertook to make future changes to their reporting. Several of these were asked to refer to the Panel’s intervention when explaining the changes in their accounts".