An FRC update for directors of listed companies

The FRC has provided a very useful update on heightened country and currency risk for the interim financial reporting season. The guidance is aimed at directors of listed companies, but would be useful for all FD’s to read and consider. 

The aim of the update is “to draw together a number of the more significant issues directors may consider in preparing interim reports in the context of heightened country and currency risk.” The update highlights the following::

  • The company’s exposure to country risk, direct or to the extent practical indirect, through financial instruments but also in terms of exposure to trading counterparties (customers and suppliers);
  • The impact of austerity measures being adopted in a number of countries on the company’s forecasts, impairment testing, going concern considerations, etc.;
  • Possible consequences of currency events that are not factored into forecasts but may impact reported exposures and sensitivity testing of impairment or going concern considerations; and
  • A post balance sheet date event requiring enhanced disclosures to adequately inform investors and other users.

In the appendix the guidance lists some of the key requirements for interim reports. These include consideration of going concern and principal risks and uncertainties, potential impairment of non-financial assets and potential impairment of financial assets. 

In the potential impairment of non-financial assets section the guidance reminds FD’s of the specific requirements and conditions in IAS 36 to test for impairment. 

View the FRC guidance on Responding to heightened country and currency risk in interim financial reports