FRC finds room for improvement in reporting by UK’s largest companies
The Financial Reporting Council (FRC) has released its assessment of reporting by the UK’s major private companies, published January this year.
The review highlights a mixed quality of reporting, particularly concerning the clarity in explaining complex or judgmental matters.
The scope of the review encompassed 20 UK companies across various industries, with revenues ranging from £1.5 billion to £24 billion. Large private entities play a vital economic role in the UK, making high-quality reporting crucial for stakeholders.
The report emphasises that companies excelling in strategic report disclosures emphasised key matters clearly and concisely, aligning with financial statement disclosures. Quality reporting prioritises clarity over volume.
Furthermore, disclosures providing detailed insight into specific judgements and estimates, along with quantified sensitivities, demonstrate better quality. Clear explanations of estimation uncertainties are deemed essential in the report.
Too many companies used generic language to describe policies for complex transactions, relying on boilerplate wording. Revenue recognition policies come in for harsh criticism, with corporates encouraged to provide more clarity on significant revenue streams, recognition timing, and revenue value determination.
The review underscores the importance of clear, concise, and tailored reporting for private companies. With efforts underway in the UK to harmonise approaches to mandatory digital reporting, at XBRL International we suspect that it will be easier to use (and for regulators to assess) these kinds of reports in the not too distant future.
Read the review here.
