FRC highlights latest issues for Audit Committees and users of actuarial information
News types: Guidance, Publications
Published: 18 November 2010
The Financial Reporting Council (FRC), the United Kingdom’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment, has published two documents highlighting the latest challenges being faced by audit committees and users of actuarial information.
The current economic outlook appears to be less depressed than in previous years. However, with a Government programme to tackle public spending, significant economic and market risks remain and will present challenges for many during the 2010/11 reporting season.
Past experience shows that insolvencies have increased after the technical end of recessions as companies run out of working capital. Companies with significant government business, especially where the spending is discretionary, are particularly exposed.
The current year “Update for Audit Committees” focuses upon risk identification and reporting. It also seeks to stimulate an appropriate environment for key estimates, assumptions and models produced by management to be challenged in a constructive way and for providing support for auditors carrying out their work with an appropriate degree of professional scepticism.
The current year “Update for users of actuarial information” (PDF) is particularly relevant to the governing bodies of insurers and pension schemes, but may also be useful for scheme sponsors, auditors and audit committees. The focus is on quality controls for actuarial work, understanding the business model and the way cash flows are projected and reported, and the way risks are assessed and managed.
Stephen Haddrill, Chief Executive of the FRC said:
“Many companies and pension schemes did sterling work last year to make sure that all material issues were captured properly and reported in an appropriate way in their financial reports. Whilst insolvencies have passed a peak and some asset prices have recovered, the nature of the crisis has changed significantly. Those exposed to government contracts will need to devote more resources to their forecasts and assessments this year”
Louise Pryor, Director of the Board for Actuarial Standards (BAS), added:
“The BAS has nearly completed its new outcome-focused standards which aim to ensure that users can place greater reliance on actuarial information. However, the main users of actuarial information may not yet be making full use of these new standards in monitoring the quality of actuarial work. They may find these questions useful as they exercise their responsibility for taking decisions and reporting on the basis of actuarial information and advice”
Notes to Editors
The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the FRC Board. The Committee on Corporate Governance assists the Board in its work on corporate governance.
Document created under a former FRC operating body.