The Financial Reporting Council (FRC) has issued a further thematic review on the application of IFRS 15, which focusses on those areas that have previously provided the greatest cause for concern.
The FRC’s report includes examples of both good and inadequate disclosures against which companies can benchmark their own draft disclosures. The FRC will continue to challenge companies whose future disclosures do not meet its expectations.
The FRC requires entities to disclose accounting policies and other entity-specific information that provide a clear understanding of how entities have applied the requirements of the standard to their own circumstances. The FRC noted that poor disclosures often made it difficult to assess whether the underlying accounting was appropriate or not. Looking ahead, the FRC will focus in particular on the following areas in its reviews of annual and interim reports:
For financial statements reviewed as part of the thematic review, the FRC will be engaging with entities whose financial statements didn’t meet the FRC’s expectations and will continue to challenge entities on revenue disclosures in its future reviews. Accordingly, entities are advised to consider the FRC’s thematic review when preparing their next annual and interim financial statements.