The Financial Reporting Review Panel has highlighted potential reporting
issues for companies in the worsening economic climate.
In a report based on the assessment of 300 company accounts, 138 of which
were contacted by the panel which sought further information or explanation on
various accounting items.
The panel has also advised company directors to be mindful of subsequent
changes in accounting.
Sources of uncertainty affecting management’s estimates, revenue recognition
criteria and relationships with special purpose entities have been highlighted
as areas to note.
Panel chairman Bill Knight said that UK company directors are known for their
compliance with standards, and the report has been designed to address areas
more sensitive to change.
‘The panel is less likely to question directors whose business model is
clear, who avoid boiler-plate descriptions and who are open about the specific
risks and uncertainties that may challenge their business in the foreseeable
future,’ said Knight.
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