Yesterday the Financial Reporting Council published its draft plan for 2009/10. This includes updates to the FRC's strategic framework. The draft plan also sets out what the FRC believes to be the most significant risks to confidence in corporate reporting and governance. These include (to quote directly from the FRC's draft plan):Corporate governance:
[1] During a period of volatility and increased uncertainty, boards may find the assessment and management of risk particularly difficult.
[2] Providing adequate information about governance practices may be significantly more challenging for boards in the current environment.
Corporate reporting:
[1] Current economic conditions increase the risk of error or omission in preparing financial statements, which may make it more challenging for directors to prepare financial statements which comply fully with the requirements of accounting standards and show a true and fair view.
[2] In the current environment, the challenges for directors to disclose adequate information regarding companies’ business models and business risks may increase.
[3] The goal of a single set of global accounting standards may be undermined by challenges to the ability of the IASB and other standard setters to exercise independent judgement, based on their skills and experience, and by the actions of jurisdictions to carve‐out or adapt IFRS, so reducing the quality of their accounting standards.
Auditing and related services:
[1] The high level of concentration in the audit market may result in significant uncertainty and cost in the event of one or more of the major audit firms leaving the market.
[2] The complexity and volume of risks arising from the tougher economic conditions may be challenging for auditors to adequately address.
Actuarial practice:
[1] Providing information which adequately reflects the uncertainties arising from tougher economic conditions may be challenging for actuaries.
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