Solvency and liquidity queries tackled in FRC going concern guidance

Solvency and liquidity queries tackled in FRC going concern guidance

FRC guidance makes clear requirements relating to going concern and solvency and liquidity risk

NEWLY-ISSUED FRC GUIDANCE has brought together requirements of company law, accounting standards, auditing standards, other regulation and existing FRC guidance relating to the going concern basis of accounting.

The guidance also covers, within the context of principal risks and uncertainties disclosed in the strategic report, solvency and liquidity risks.

It also aims to assist directors of companies that do not apply the UK Corporate Governance Code in assessing: The going concern basis of accounting, material uncertainties, solvency and liquidity risk; The periods of assessment; and the relevant disclosure requirements.

Under the requirements, clear and concise reporting is paramount and when thinking about disclosures, directors are encouraged to consider the application of materiality in providing company-specific information.

FRC executive director Melanie McLaren said: “The FRC encourages companies to take a broader longer-term view of the risks and uncertainties facing their business. We have seen an evolution in corporate reporting in recent years. The Sharman Inquiry and the strategic report with its forward looking-orientation have been catalysts for change and it is important for our codes, standards and guidance to remain current against this backdrop. Directors have told us that they welcome practical guidance.”

Resources & Whitepapers

How to optimise your compliance lifecycle

How to optimise your compliance lifecycle

3m
The new rules of accounting

The new rules of accounting

4m
5 ways internal productivity can boost your profitability

5 ways internal productivity can boost your profitability

4m
Crushing the Four Barriers to Growth

Crushing the Four Barriers to Growth

4m

Related Articles

Brydon and the audit gap: Expectations, definitions and fraud

Accounting Standards Brydon and the audit gap: Expectations, definitions and fraud

1m Chris Jewers
FRC revises standards in bid to strengthen audit confidence

Accounting Standards FRC revises standards in bid to strengthen audit confidence

2m Chris Jewers
FRC audit inspection finds no improvement on last year

Accounting Firms FRC audit inspection finds no improvement on last year

7m Chris Jewers
Feedback led to change in FRS102 on Director’s Loans

Accounting Standards Feedback led to change in FRS102 on Director’s Loans

8m Tom Lemmon
Kingman has missed the point

Accounting Standards Kingman has missed the point

1y Richard Murphy
Is it time for moratorium on board room positions for former partners?

Accounting Standards Is it time for moratorium on board room positions for former partners?

1y Gary Dixon, Association of Independent Non-Executive Directors
Membership of the accountancy profession on the rise

Accounting Standards Membership of the accountancy profession on the rise

3y Alia Shoaib, Reporter
Ex-RSM Tenon CEO fined; ex-FD and PwC face complaints over its accounting

Accounting Standards Ex-RSM Tenon CEO fined; ex-FD and PwC face complaints over its accounting

3y Kevin Reed, Writer