On December 15, 2016, the Financial Reporting Council (FRC) issued a press release announcing that it will, in 2017, undertake thematic reviews of certain aspects of companies’ corporate reports and audits, where it believes there is scope for improvement and particular shareholder interest.
The following topics are to be covered:
The FRC will write to a number of companies prior to their year-end, informing them that it will review disclosures in their next published reports, specifying the topic under review. The FRC will also monitor and report on companies’ disclosures relating to:
- The impact of new IFRSs; including the timeliness and usefulness of the information provided
- Principal risks and uncertainties relating to Brexit and the low interest rate environment and the extent to which they are company specific.
- Auditors’ responsibilities relating to other information
- Audit firm governance and culture
- Materiality: update on 2013 thematic review
The FRC will consider the six largest audit firms’ policies and procedures and will review a number of audits in these specific areas to make a comparison with a view to identifying both good practice and scope for improvement.
As well as the thematic reviews in its corporate reporting and audit monitoring activities, the FRC will give priority to reports and audits in the property, travel and leisure and support services sectors. Audit monitoring will additionally also focus on the financial services sector and audit monitoring will pay particular attention in the audits reviewed to changes in auditor appointment, audit of pension balances and disclosures and the audit of impact of currency fluctuations.
(FRC, 2017/18 thematic reviews expected to prompt improvements – 15.12.16)