Thursday, October 21, 2021

UK audit watchdog says companies provide too few details to assess viability

LONDON – A review about the chances of UK listed companies to survive found there were too few details to properly inform investors, the auditing watchdog said on Wednesday.

“Clear and comprehensive disclosures on these matters are particularly important given the backdrop of the COVID-19 pandemic, which has increased uncertainty for some companies,” the Financial Reporting Council said in a statement.

Many companies had to borrow money from government schemes launched to bridge the pandemic and some industries such as travel and hospitality have been badly hit by the lockdown restrictions.

“Uncertainties that affect viability or concern should be clearly explained to stakeholders,” the FRC said.

In their annual reports, companies typically determine how they expect to remain viable for three years and whether there are any “material uncertainties,” such as potential difficulty meeting debt repayments.

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The watchdog reviewed a selection of annual reports with fiscal years ending between December 2020 and March 2021.

The FRC said the assumptions made to reduce the disclosure of concern often lack sufficient detail to support the decisions.

The FRC, which also outlines how companies implement Britain’s corporate governance code, said firms should extend the period over which they assess their viability and where possible longer-term information. provide.

British retailer BHS is facing massive reforms in company reporting and auditing after the collapse of corporate and builder Carillion raised questions about the quality of auditing.

The UK has proposed that companies publish a “flexibility statement” covering viability for a further five years, rather than the three-year period typically used to assess the concern.

by hoo jones

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This News Originally From – The Epoch Times

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