The Financial Reporting Council has published updated guidance for audit committees with regard to issues arising from current economic conditions. The purpose of the guidance is set out in the introduction: "to influence the thinking and focus of audit committee work during the forthcoming annual reporting season by posing some key questions prompted by recent FRC analysis of the current reporting environment”.
Recent studies by the FRC have identified room for improvement in the relevance and focus
of corporate disclosures about principal risks and uncertainties. It has been observed that
some companies present a list of all possible risks rather than those that might be regarded as “principal risks” and that some risk disclosures lack company specific detail to enable a
reader to properly understand the true nature of the exposure. Work by the FRC has also identified that it is not always clear from the risks and uncertainties reported whether they have been fully evaluated and taken into account in preparing budgets and forecasts that support going concern and impairment assessments.
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