Friday, 13 November 2020

UK: FRC - developments in audit | company reporting expectations

The Financial Reporting Council has, this week, published: [1] the end of year letter sent to CEOs, CFOs and Audit Committee Chairs summarising key developments for 2020/21 annual reports (here, pdf); and [2] Developments in Audit 2020 (here, pdf).

Amongst the matters of note in the FRC's letter are comments relating to section 172 statements: based on a review, the FRC explains that many companies have failed to explain sufficiently how directors discharge their section 172 duty (under the Companies Act 2006), in particular with regard to the consequencess of their decisions in the long-term. In the audit publication, the FRC notes that, in 49 out of the 130 audits inspected as part of its 2019/20 inspection cycle, improvements were required (key issues related primarily to insufficient challenge of management in areas of complexity and forward looking judgements).

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