FRC in push to improve smaller company accounting standards

UK accountancy watchdog the Financial Reporting Council (FRC) is making a push to get smaller companies to tighten their accounting standards.

It plans to write to 40 smaller listed and AIM quoted companies prior to their year-end, informing them that it will review two specific aspects of their next published reports and accounts.

Specific aspects will be drawn from five areas that have recently featured in FRC thematic reviews or Financial Reporting Lab reports, where the FRC has published examples of what better quality disclosures might look like.

In particular, it wants smaller companies to improve the classification of unusual or one-off items on the cash flow statement.

Tailored approach

“We expect companies to tailor accounting policies appropriately and to consider whether new policy disclosures are required for large or unusual transactions in the current year,” said the FRC.

The watchdog will also monitor disclosures in December 2017 reports and accounts relating to the future impact of the implementation of the new IFRS on lease accounting.

In addition, FRC said it would conduct a focused review of the detail reported in June 2018 interim reports of a number of companies in industries where the new IFRSs on revenue and financial instruments are expected to have the most material impact.