Improving the quality of reporting by smaller listed companies

The Financial Reporting Council (FRC) has launched a programme of measures to help smaller quoted companies improve the quality of their corporate reports.

A discussion paper, 'Improving the Quality of Reporting by Smaller Listed and AIM Quoted Companies' published by the FRC, details its findings following a review of the quality of reporting by these companies and invites feedback on the findings and conclusions.

The FRC will address the issues identified in a number of ways:

• Develop with Professional Accounting Bodies and others, ways of providing more focussed training to finance staff;
• Provide practical guidance to Audit Committees and Boards on evaluating the adequacy of a company's financial reporting function and process;
• Promote options for reduced disclosures against IFRS against such companies;
• Provide annual guidance to boards of smaller quoted companies on the current issues, areas of focus for investors and common errors; and
• Enable participation by smaller quoted companies and their investors/analysts in the work of the FRC's Financial Reporting Lab to identify ways to improve the quality of corporate reporting.

In addition, the FRC will be discussing with the London Stock Exchange and UK Listing Authority ways to ensure that companies have appropriate financial reporting resources.

The FRC's evidence suggests smaller quoted companies believe that investors pay little attention to their annual report and hence do not prioritise its preparation to a higher standard. In fact, investors have told the FRC that such reports are important to them, partly because there are fewer analysts' reports. In addition, companies can lack sufficient skilled resources and are not always up to date with reporting requirements.

ICAS will be responding to the FRC and would like to hear the views of members in the smaller listed sector, whether they are preparers, auditors or investors.  If you would like to comment, please contact:  accountingandauditing@icas.com by Friday 17 July.

The discussion paper is open for consultation until 31 July