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The Financial Reporting Council (FRC) has published ain advance of the 2021 interim reporting season. The thematic review highlights areas of good practice and makes suggestions for improvements to meet the needs of stakeholders. It considered a sample of 20 recently published interim reports from entities listed on the main market of the London Stock Exchange.

Overall the FRC was pleased with the quality of interim reports. Companies had taken on board the recommendations from previous thematic reviews and the guidance given in the FRC’s joint statement with the FCA and the PRA on Covid-19. They had also enhanced their disclosures particularly in relation to going concern and the statement of cash flows.

There however remains opportunities for further improvement, and the FRC encourages preparers to carefully consider the findings of this thematic when preparing their forthcoming interim reports and expects companies to communicate material information clearly and concisely.

The key observations identified were:

• Management commentaries provided an overview of the key events in the first half of the year and how these have affected operations and results. The best examples differentiated the impact that the various stages of the coronavirus pandemic had on the financial statements.
• Where necessary, companies gave an update of the risks and uncertainties for the remaining six months of the year.
• The majority of companies in the sample provided detailed explanations of their use of Alternative Performance Measures (APMs) and reconciliations of APMs to GAAP measures.
• Better disclosures of impairments included reasons for the impairments and quantified the key assumptions used in the impairment assessments.
• The best examples of changes in estimate disclosures included, where relevant, an update of the IAS 1 ‘Presentation of Financial Statements’ estimate uncertainty disclosures in addition to disclosing the nature and amount of the change in estimate.
• Better disclosures of significant changes in current and deferred tax balances included a breakdown of the components of the tax charge and the deferred tax balance by category of temporary difference.
  Better disclosures of events or transactions significant to understanding the changes in the financial position and performance of the company since the last annual reporting period followed the disclosure guidance of individual IFRS to provide updated relevant information.

If you require any further information or advice on interim reporting, please speak to Lee Marshall.