FRC publishes review findings on viability and going concern disclosures

Viability and going concern reporting need to be improved to give investors and key stakeholders a clearer picture of the financial stability of businesses, warns the Financial Reporting Council (FRC).

In a statement issued on 22 September 2021, the FRC has called for businesses to better report their longer-term viability and liquidity to investors – particularly during times of economic uncertainty. It forms part of the financial watchdog’s findings in a review of companies’ viability and going concern disclosures amid the Covid-19 pandemic, which has pushed heightened levels of market volatility and financial insecurity.

While companies have outlined to investors and shareholders their financial position in regulatory filings and financial results since the pandemic began last year, the FRC said that viability and going concern assessments often lacked sufficient qualitative and quantitative detail.

The FRC’s Executive Director of Regulatory Standards, Mark Babington said:

“High-quality viability and going concern disclosures are vital for investors and other users of accounts to help them make informed decisions about a company’s liquidity, solvency and longer-term viability. This is particularly important during times of uncertainty and economic volatility.

“Companies should carefully consider the review findings with a view to improving their viability and going concern disclosures in their upcoming annual reports and accounts.”

The FRC’s press release can be found here and the report here.

Published 22 September, 2021