Welcoming the FRC and ICAEW joint publication ‘A practical guide for audit committees on improving financial reporting’, Lee Marshall, Head of Accounting and Business Advisory at RSM, said:
‘The FRC and ICAEW have published an excellent guide targeted at Smaller Listed and AIM quoted companies to help audit committees and directors assess the quality of their financial reporting and consider what changes may be needed to improve it.
‘Simply doing the same as last year is unlikely to be the best idea, so holding a detailed debrief with all stakeholders and generating an action plan when this reporting season is still fresh in the memory may well provide motivation and improve staff morale for next year.
‘The paper is a practical guide with lots of top tips to improve the quality of financial reporting including sections on the importance of nurturing a culture of improvement, timing and planning as well as ensuring the team tasked with delivering the annual report have the skillset and experience and in the latter section it notes that ‘many smaller quoted companies face a significant challenge when preparing the annual report due to the inadequacy of resources.’
'The report suggests audit committees and companies should ‘assess the adequacy of the resources in the finance team’ and then ‘consider whether external expertise is required to help prepare the annual report’.
Lee added ‘We are often asked to help clients either prepare the full annual report, or to provide advice on specific aspects of the accounting such as share based payment advice, or the transition to a new standard. In the latter cases companies are increasingly asking us to review transactions and help with transitions in real time to make sure the accounting is right first time, and well before the year end. This makes the year end process much less stressful as the big challenges have been dealt with and there are supporting papers for the auditors to review.
'With the FRC and ICAEW issuing this report now, it gives directors plenty of time to reflect on the recent reporting cycle, consider how they will resource next year’s annual report production, decide which areas they wish to keep inhouse and consider which areas they will seek help from professionals who are fully up to speed with the requirements of new and existing standards.'