FRC calls for more extensive disclosure on effects of coronavirus (COVID-19)

FRC calls for more extensive disclosure on effects of coronavirus (COVID-19)

The Financial Reporting Council (FRC) has released its first thematic review of company reporting since the coronavirus (COVID-19) pandemic began. In its review, the FRC contends that ‘although companies provided sufficient information to enable a user to understand the impact COVID-19 had on their performance, position and future prospects, some—particularly interim reports—would have benefited from more extensive disclosure’.

The FRC also reminds companies that they should:

• explain the significant judgements and estimates made in preparing their accounts and provide meaningful sensitivity analysis or details of a range of possible outcomes to support any disclosed estimation uncertainty

• describe any significant judgements made in determining whether there is a material uncertainty about their ability to continue as a going concern

• ensure that assumptions used in determining whether the company is a going concern are compatible with assumptions used in other areas of the financial statements

• apply the requirements of IAS 1 to any exceptional or similar items, with income statement sub-totals comprising only items recognised and measured in accordance with IFRS

• apply existing accounting policies for exceptional and other similar items to coronavirus related income and expenditure consistently and should not split income and expenses between coronavirus and non-coronavirus financial statement captions arbitrarily

• prepare interim reports that provide sufficient information to explain the impact that coronavirus has had on their performance, position and future prospects

Source: High-quality disclosures needed to reflect impact of Covid-19

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