THE FINANCIAL STATEMENTS of six FTSE 350 companies have failed to meet the FRC’s reporting standards over the last year, according to an annual review of company accounts.
In its latest assessment of financial statements in the year to March 2014, the accountancy watchdog found that corporate reporting by large public companies is “generally of a high standard”. However, ten UK company reports, including six from the FTSE 350, were determined to have fallen short of FRC requirements.
Companies including Royal Bank of Scotland, WH Smith, Rolls-Royce, GKN, Kazakhmys and Anglo Pacific Group were found to have issues around the clarity of their financial statements. Other companies outside of the FTSE 350 included in the list were the Co-operative Bank, Pendragon, Anglo-Eastern Plantations and Eland Oil & Gas.
The FRC’s assessment is based on a review of 271 sets of reports and accounts in the year to 31 March 2014, of which 100 companies were approached for further information and explanation.
This year, the FRC said it prioritised the reviews of companies of greatest economic significance. Nevertheless, the FRC said it found a higher proportion of poorer quality accounts were produced by smaller listed and AIM quoted companies.
In April 2014, it established a project to help improve the quality of reporting by smaller companies within the next three years. The project is currently in its initial phase, which involves gathering and assessing evidence of the root causes of the issues.
Common areas of challenge raised with companies during the year included business reviews/ strategic reports; pensions; exceptional items; critical judgments; principle risks and uncertainties; accounting policies (particularly revenue) and impairments.