FRC issues consultation on Going Concern Guidance
News types: Consultation Announcement
Published: 5 August 2024
The Financial Reporting Council (FRC) has today issued a consultation on revisions to its Guidance on the Going Concern Basis of Accounting and Related Reporting, including Solvency and Liquidity Risks. Once finalised, it will replace the FRC’s existing guidance, issued in 2016.
The draft Guidance is intended to help companies prepare high-quality, company-specific disclosures about their going concern conclusions and how they were reached. This process should allow investors to understand a company’s exposure to and plans to navigate solvency and liquidity risks and provide them with the confidence to allocate capital and support the growth of UK companies.
The Guidance will be non-mandatory and will serve as a proportionate and practical guide to all UK companies within its scope, which includes companies that apply the UK Corporate Governance Code, but excludes small companies and micro-entities. This includes a revised range of factors and techniques directors could consider when performing going concern assessments.
The draft guidance brings together the requirements or provisions of company law, accounting standards, auditing standards, listing rules, the UK Corporate Governance Code and other relevant regulation.
As ever the FRC consults with its stakeholders on guidance and looks forward to hearing views by the consultation closing date on 28 October 2024. The FRC expects to publish the final guidance in early 2025.
The FRC’s Executive Director of Regulatory Standards, Mark Babington, said:
“The revised Guidance brings it up to date with recent developments in corporate reporting, audit and evolving reporting practices. This consultation demonstrates the FRCs continued efforts to support UK companies delivery of high-quality reporting in a critically important area, that enables them to more effectively access capital and grow their business.”