The Financial Reporting Council (FRC), the United Kingdom’s independent regulator responsible for promoting confidence in corporate reporting and governance, has published updated Guidance for directors of UK companies to assist them when making their assessment of going concern. The Guidance is based on three principles covering the process which directors should follow when assessing going concern, the period covered by the assessment and the disclosures on going concern and liquidity risk. The Guidance emphasises the importance of balanced, proportionate and clear disclosures about going concern issues and the key assumptions being made in one place in an annual report.
The Guidance takes into account feedback received from market participants in response to a series of documents published by the FRC in the last twelve months including an Exposure Draft. Commentators expressed strong support for both the principles based approach and the implementation date of 31 December 2009.
The Guidance is designed to be relevant to the annual going concern assessment that must be carried out by directors of all UK companies including those that apply the Financial Reporting Standard for Smaller Entities. For companies that are admitted to trading on a regulated market the Guidance will apply to both their annual and half-yearly financial statements.
See full Press Release.
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