MANY BOARDS ARE failing to properly report the risks and uncertainties facing their businesses, according to the financial reporting watchdog.
The Financial Reporting Review Panel (FRRP) issued a warning that in some cases companies failed to properly identify the principle risks they face or included commentary on risks that were inconsistent with statements elsewhere in the company’s reports.
Bill Knight, chairman of the FRRP (pictured), said: “Any board should be able to describe in their accounts, simply and clearly, the principal risks and uncertainties facing the company. Many boards do this, but too many do not. Boards who retreat behind boilerplate give the impression that they have not themselves understood the risks they face. “
The Companies Act 2006 requires directors to include a statement on risks and uncertainties but the FRRP found that in many cases companies were failing to properly address the issue.
In some cases company boards are only disclosing a “risk” framework or failing to revel how the risks will be managed.
The FRRP has not set guidance for boards addressing the issue of risks and uncertainties.
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