FRC releases guide with financial reporting tips for small listed companies
The FRC and ICAEW have published a guide to help smaller listed and AIM quoted companies improve their financial reporting.
The guide addresses issues raised by the Financial Reporting Council (FRC) about the quality of financial reporting in this sector, and provides practical tips and questions for audit committees to consider, with a view to driving up the quality of smaller quoted company financial reporting.
"'Smaller Listed and AIM Quoted Companies – A Practical Guide for Audit Committees on Improving Financial Reporting' offers practical, cost-effective suggestions on how smaller quoted companies can improve the quality of their financial reporting and suggested questions for audit committees to ask themselves and those associated with the financial reporting process, including the board, chief financial officer, finance team and external auditors,” the FRC said.
It explained that these questions are designed to encourage the smaller quoted companies to reflect on current practices and consider areas for improvement.
The FRC has identified four areas where sharper focus could help companies improve the quality of their annual report and accounts. These are:
- adequate time and resources available to produce good quality annual reports;
- early engagement on the annual report by those charged with governance;
- deeper understanding of relevant reporting standards and requirements; and
- appropriate rigour by the auditor in the audit of financial statements and review of annual reports.
"Our suggestions are not mandatory or prescriptive, and the guide is not a comprehensive list of all audit committee responsibilities," the FRC noted.
"It aims to encourage good practice and to help audit committees and boards evaluate the adequacy of a company’s financial reporting function and processes and drive improvements in quality."