Skip to content

22 May, 2025

  • Saved Articles
  • My Account
  • Subscribe
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • UK Corporate Governance Code

      Board meetings ‘are not up to scratch’

      Nearly three-quarters of board members believe the board’s performance in meetings needs improvement, an expert...

    • gender pay gap

      Act now to close the gender pay gap

      This month, it is 55 years since the Equal Pay Act, yet pay inequality persists....

    • monitor sustainability

      How to equip the auditco to monitor sustainability

      The board’s expanding remit to oversee non-financial reporting calls for significant reforms, with stakeholder trust...

  • Comment
      • View all
    • gender pay gap

      Act now to close the gender pay gap

      This month, it is 55 years since the Equal Pay Act, yet pay inequality persists....

    • leadership on AI How to get ahead on AI leadership

      The question isn’t how AI will change business—it’s whether leaders can harness it to drive...

    • canada tariffs Corporate governance to the fore in Canada

      As Canada responds to the tariff conditions set by the US, companies need to take...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • UK Corporate Governance Code Board meetings ‘are not up to scratch’

      Nearly three-quarters of board members believe the board’s performance in meetings needs improvement, an expert...

    • financial sanctions Tariffs chaos drives boardroom focus on resilience

      Business leaders will prioritise the resilience of their organisations in the face of economic upheaval...

    • ai boards Corporate world has a ‘huge appetite’ for artificial intelligence

      AI could change boardrooms to the extent that directors’ duties would change too, a panel...

  • Board Careers
  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Board Advisory & Corporate Services
    • Route to the top 2025

      Route to the Top 2025

      Heidrick & Struggles’ report draws on an analysis of the profiles of the 1,232 CEOs...

    • Director Reference Guide: Fostering the board-CEO relationship

      This Board Agenda Director Reference Guide on fostering the board-CEO relationship provides practical advice to...

    • Forvis Mazars AI 2025

      Performance Pulse: Are UK businesses prepared for AI?

      Forvis Mazars measured the AI preparedness of more than 300 UK businesses: 97% say they're...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Careers
    • Board Expertise
    • finance
    • Technology

FRC issues further warning over Covid and corporate reporting

by Gavin Hinks on October 22, 2020

The watchdog is maintaining pressure on companies to be transparent in reporting the impact of the pandemic on their prospects.

Covid-19 crisis and stock market prices

Image: OSORIOartist/Shutterstock.com

Watchdogs have stressed yet again that companies be plain in disclosing their performance prospects as a result of the pandemic in their reporting.

The warning comes in the Financial Reporting Council’s (FRC) annual review of corporate disclosures which highlights key areas for improvement in annual reports.

Detailing expectations for 2020–21, the FRC says disclosures should be made that “provide insights into the board’s assessment of the business’s prospects” and the methods and assumptions underlying the assessment.

The review sees the watchdog maintain pressure on companies to come clean to stakeholders about the effects of the pandemic.
There is also a stress on companies being open about “material changes” in business models as a result of Covid-19 and the lockdowns that followed.

The pandemic and future prospects

The review reveals that the FRC looked at 216 sets of accounts. Of those, 96 faced “substantive questions” about their reports. Fourteen were found to be in so far from compliance with reporting standards they were required to restate their accounts. The FRC also lists a “top ten” list of areas where companies need to improve their reporting.

According to David Rule, the FRC’s executive director of supervision, companies are expected to act on the areas of concern. “Given the heightened need for high-quality disclosures as a result of the Covid-19 pandemic, it is vital companies carefully consider the FRC’s findings ahead of the next reporting cycle.”

The next round of FRC inspections will focus on issues arising from the pandemic, such as disclosure of risk and the use of “judgments” in the accounts.

Judgments and estimates made in accounting are the number one issue on the FRC’s hit list. Statements about the impairment of assets come in at number two, while revenue recognition, a perennial bugbear in accounting, comes in third.

Throughout the year the FRC has been pushing a message to companies that they must provide “more extensive” disclosures because of the pandemic. The FRC has previously said that even though financial reporting may look “sufficient”, investors are looking for more detail.

In July David Rule said the issue was not only reporting performance but also reporting “future prospects”, a theme picked up and pushed in this week’s annual review.

Elsewhere auditors have been warned to prepare themselves for companies that may opt to hide the full implications of the pandemic on their finances.

Public interest reporting

A consultation on the future of financial reporting is also under way at the FRC. The watchdog proposes that companies begin producing what it terms a “public interest report” to sit alongside separate business and financial reports.

According to Mark Babington, the FRC’s executive director of regulatory standards, annual reporting has grown to include ever increasing volumes of information, a fact that has undermined their “purpose and usability”.

“To build trust in business we need a modern corporate reporting system that is transparent, flexible and puts users of corporate reporting at its heart.”

The FRC found in a survey that 51% of those who use company disclosures are “always interested” in the way a company’s activities affect the environment, communities and suppliers.

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • FRC says climate disclosures are 'failing to meet investor expectations'
    September 11, 2021
    Climate disclosures warning sign

    Review by the UK regulator finds there is "little evidence" that business models and strategy are being influenced by climate considerations.

  • Sustainability body issues global disclosure standards
    June 26, 2023
    sustainability standards

    The International Sustainability Standards Board’s guidance is aimed at improving trust in climate-related disclosures.

  • Further delay for audit reform
    September 1, 2023
    audit reform delay

    Long-awaited legislation to create a new audit and governance watchdog may not see light until after the election, says news report.

  • The long and winding road to financial reporting standards
    September 8, 2022

    Setting standards for sustainability reporting is complex. Can we learn from the past 150 years of setting financial reporting standards?

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

annual reports, coronavirus, corporate reporting, financial reporting, Financial Reporting Council

Search


Follow Us

Register Free

Stay in the know! Register to access our latest governance news; plus receive updates about our events and podcasts – Sign up here

 

Most Popular

Featured Resources

wef global risks 2025

The Global Risks Report 2025

The 20th edition of the Global Risks Report reveals an increasingly fractured global...
Supply chain management cover

Strategic Oversight in Supply Chain Management: A Guide for Corporate Boards 2025

Supply chains have become complex, interdependent and opaque and—according to research...
OB-Cyber-Security

Cyber Security: What Boards Need to Know

Maintaining firewalls, protecting servers and filtering malicious emails rarely make...

The IA’S Principles Of Remuneration 2024 2025

This guidance from the Investment Association is aimed at assisting remuneration...
Diligent 2024 leadership tech cover

Leadership, decision-making & the role of technology: Business survey 2024

This research report by Board Agenda and Diligent sheds light on how board directors...

Director Reference Guide: Navigating Conflict in the Boardroom

The 'Director Reference Guide' on navigating conflict in the boardroom provides practical...
Nasdaq 2024 governance report cover

Nasdaq 2024 Global Governance Pulse

This Nasdaq survey gathered data from more than 870 board members, executives, and...

Becoming a non-executive director (4th edition)

Board composition is the subject of much debate, while the role of the non-executive...
art & science brainloop new cover

The Art & Science of Creating an Effective Board

Boards are coming under more scrutiny and pressure than ever before from regulators,...
SAA First time NED guide

First Time Guide for Non-Executive Directors

The role of the non-executive director has never been more vital: to advise, support,...

Register Free

Stay in the know! Register to access our latest governance news; plus receive updates about our events and podcasts. Register


  • Editors & Contributors
  • Editorial Advisory Board
  • Board Advisory & Corporate Services
  • Media Marketing Solutions
  • Contact Us
  • About Us
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
|

Copyright © 2025 Questor Media Group Ltd.

  • Terms & Conditions
  • Privacy Policy
  • Sitemap