The Financial Reporting Council has issued some guidance for the Boards of companies in the construction and business support services sectors, to remind them of their reporting obligations. This guidance has been written for these sectors in the wake of the collapse of Carillion, however the guidance is equally relevant to all companies.
- The overall purpose of the annual report and accounts: how they should present clear and relevant information to users, including content and clarity of disclosures.
- The going concern basis of accounting: whether the company should continue to adopt this as a basis for accounting and what additional disclosures may be required.
- The strategic report, risk and viability: the purpose of the strategic report, key contents and the need to provide clear and detailed descriptions of the company’s principle risks and uncertainties.
- Judgements and estimates applied in preparing the financial statements: why clear disclosures are so important and in particular the impact of IFRS 15 Revenue from Contracts with Customers.
- Cash flow and net debt indicators: the importance of clear information on the levels of debt, cash flows and the conversion of operating profits into cash; implementing the amendments to IAS 7 Statement of Cash Flows; and the disclosure requirements of IFRS 7 Financial instruments: Disclosures.
- Complex employee pension arrangements: the disclosure requirements of IAS 19.
- The role of the auditors: how they need to assess the appropriateness of the going concern basis of accounting and the adequacy of disclosures where a material uncertainty exists.
- The role of Audit Committees: the need to satisfy itself as to the independence of the auditor and to set out the work it has carried out in respect of any significant financial reporting risk and judgements raised in the audit report.
We recommend you read the full guidance for further insights.
For more information or assistance with your reporting obligations, please speak to your usual RSM contact.
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