FRC: Annual Review of Corporate Reporting 2024/25

On 30 September 2025, the Financial Reporting Council (FRC) published its latest Annual Review of Corporate Reporting. This sets out the findings from the FRC’s review work in its 2024/25 monitoring cycle, information on thematic reviews and the FRC’s expectations for the coming reporting season.

Key findings

The quality of corporate reporting across the FTSE 350 companies reviewed in 2024/25 has been maintained, with a lower proportion of the FRC’s reviews this year relating to both companies within and outside the FTSE 350 resulting in substantive queries compared to previous years.

Overall, the number of restatements prompted by the FRC’s reviews has fallen this year compared to the previous three years. There has also been a reduction in the number of restatements that affect profit. However, there remains a quality gap between companies in the FTSE 350 and other companies, with the majority of restatements continuing to arise in companies outside the FTSE 350.

The most frequently raised issues remain consistent with recent years, with impairment continuing to be raised most frequently. The FRC is disappointed by the continuing number of cash flow restatements resulting from reviews. These were mainly classification errors by companies outside the FTSE 350 and will be an area of focus in the thematic review into reporting by smaller listed companies referred to below.

Inconsistency of information and explanations between the financial statements and other sections of the report and accounts remains a key theme that resulted in the FRC writing to companies. The explanation of significant judgements and estimates, including disclosure of the key inputs and assumptions, remains an area for improvement in relation to several topics, including impairment testing, financial instruments and revenue.

Key expectations

The FRC’s expectations for the coming reporting season remain consistent with those highlighted in recent years. In all cases, the FRC expects directors to apply careful judgement in the preparation of the annual report and accounts. The FRC only asks companies a substantive question when it appears that there is, or may be, a material breach of the relevant reporting requirements.

The FRC encourages companies to consider the following matters when preparing their next annual report and accounts:

• Pre-issuance checks: Companies should have a sufficiently robust review process in place to identify common technical compliance issues. The FRC comments that many questions, corrections and restatements could be avoided by reviewing against the top ten issues the FRC challenges, including ensuring that clear, company-specific accounting policies are included for key matters such as revenue recognition.
• Judgements, risks and uncertainties: Companies should ensure clear and consistent disclosures about judgements, uncertainty and risk are provided that are sufficient for users to understand the positions taken in the financial statements.
• Narrative reporting: Companies should ensure the strategic report includes a fair, balanced and comprehensive review of the company’s development, position, performance and future prospects. The FRC reminds companies to take care to comply with the applicable climate-related reporting requirements, ensuring disclosures are concise and that material information is not obscured.
• Step back: Companies are reminded to take a step back and consider whether the annual report and accounts as a whole: tells a consistent and coherent story throughout the narrative reporting and financial statements; is clear, concise and understandable; includes all material and relevant information, including information not specifically required by standards, where it is necessary for users’ understanding; and includes only material and relevant information – good quality reporting does not necessarily require a greater volume of disclosure.

Thematic reviews

The report summarises the key findings of the FRC’s thematic reviews undertaken since the publication of its Annual Review of Corporate Reporting 2023/24 in September 2024 and provides details of reviews due in autumn 2025 as follows:

• Reporting by the UK’s smaller listed companies: The FRC is undertaking a thematic review to look more closely at the quality gap between FTSE 350 companies and other smaller listed companies. This thematic review will focus on the reporting by listed companies ranked outside the FTSE 350 and those listed on AIM. It will focus on the areas where the FRC has most frequently asked substantive questions of such companies as part of its routine monitoring work in recent years, which are also areas to which investors pay particular attention. These are impairment of non-financial assets, revenue recognition, financial instruments, cash flow statement and related notes. The FRC will also explain its approach to proportionality and provide insights into how it reviews companies’ accounts and identify potential issues it might query with the companies.
• Share-based payments: The FRC expects to publish a thematic review on IFRS 2, ‘Share-based Payments’, shortly. Its focus will be on listed companies with significant share-based payment (SBP) arrangements, and will seek to clarify expectations on recognition, measurement and classification of such arrangements.
• Investment trusts, venture capital trusts and similar closed-ended entities: Investment trusts make up a meaningful proportion of the FTSE 350 and the FRC comments that while the accounts for these companies are generally relatively straightforward, certain common issues in these annual reports have been identified over time. The thematic review focuses on the requirements under both IFRS and FRS 102 for areas where the FRC finds more frequent application issues, with a particular focus on the disclosures about fair value measurement of Level 3 financial investments. The report will highlight examples of good practice reporting in the areas examined, and aspects where reporting could better meet the disclosure requirements of the applicable standards.

(FRC, Annual Review of Corporate Reporting 2024/2025, 30.09.2025)