Annual reports must reflect economic uncertainty

ACCOUNTING'S WATCHDOG has warned directors that the must recognise the effect of global economic issues when producing their annual reports and accounts.

The Financial Reporting Council (FRC) has updated its guidance for the kind of risks that directors must consider when putting together their annual reports.

Companies' exposure to country risk through the use of financial instruments; the impact of country-specific austerity measures; currency events; and providing enhanced disclosure post-balance sheet to avoid misleading investors have been highlighted by the regulator.

"Directors of companies in the UK are trying to assess the risks to their companies' business models in difficult and rapidly changing economic conditions," said FRC chief executive Stephen Haddrill (pictured).

"The FRC is committed to promoting market confidence in corporate reporting. It has published this guidance for Directors on the preparation of balanced and understandable disclosures that put their company's position and prospects in context of the current market conditions."