The Financial Reporting Council has updated its guidance for directors of listed companies on ”Responding to heightened country and currency risk in interim financial reports”. The updated guidance, which was first published in January 2012, is here and the accompanying FRC press release is here.
The FRC summarises the purpose of this guidance as follows:
“This Update for Directors has been prompted by the continuing economic uncertainties facing a number of countries around the world. This Update draws together a number of significant issues directors may need to consider in preparing interim reports in the context of heightened economic uncertainty. These include, where relevant:
- The company’s exposure to country risk, direct or to the extent practical indirect, through financial instruments, through foreign operations, and through 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.;
- The possible consequences of currency events that are not factored into forecasts but may affect reported exposures and the sensitivity testing of impairment or going concern considerations; and
- Post balance sheet date events that require enhanced disclosures to adequately inform investors and other users.
The examples referred to in this Update are not intended to be comprehensive but to help directors and Audit Committees in their thinking about the relevance of these issues to the company’s particular circumstances. This Update does not deal with directors’ more general obligations to keep the market informed.”