Chief executive Stephen Haddrill points out that the 2016 corporate reporting season is now in full flow, but the volatility of asset prices, the oil price slump and the uncertainty over the EU referendum may well affect the information that some companies provide.
There are five areas that preparers will need to consider before issuing their reports and accounts, the FRC suggests. The best place to set out the most up to date view of the company’s prospects is the strategic report. The board will need to review this carefully to ensure that statements drafted some time ago are still “pertinent”.
The directors may have to revisit their judgments about the principal risks to the business and their potential impact. The FRC thinks that “in some cases the range of potential outcomes may be wider than previously” and that directors might need to disclose more information about sensitivities to ensure users’ understanding.
The regulator reminds companies that their accounts should be drawn up on the basis of the conditions existing at the balance sheet date. Anything coming later that may affect valuations may need to be disclosed and the range of outcomes reconsidered.
Similarly, companies should consider whether there have been any material post balance sheet events. If so, they are required to describe the nature of the event and its estimated financial impact where this is possible.
Finally, companies will need to consider whether the events have a material effect on the preparation of the accounts on a going concern basis and what disclosures to make about material uncertainties relating to such an assessment.