This follows a public consultation calling for greater transparency and the new system will come into force immediately.

The FRC’s Conduct Committee has approved a revised set of operating procedures for reviewing corporate reporting. The revised procedures will increase the transparency of the Committee’s processes by permitting publication of the names of those companies whose reports and accounts it has reviewed, once the cases are closed.

The procedures also allow for more executive-led decision making, with a view to making them more efficient and effective. 

The individual companies reviewed for the purposes of the annual exercise, will be named in press announcements, which companies will have advance sight of, with a minimum of 24 hours’ notice in advance of making the announcement. The FRC stated that ‘amendments to the wording of press announcements will not generally be accepted, except in relation to matters of factual accuracy’.

The FRC reviewed 192 annual and interim reports and accounts as part of its 2015/16 monitoring activities, published in October 2016. Two thirds of those reviews were closed without the need for follow up action. The rest resulted in substantive issues being raised around quality of accounts and financial reporting.

In addition to providing details about individual companies and the quality and effectiveness of their annual reports, the FRC will continue to release details about overarching problems identified more generally in each batch of annual reports, but will not name individual companies in these general reports.

The Conduct Committee’s authority extends to all companies that prepare annual reports under the Companies Act 2006. The annual reviews tend to focus on public and large private companies, including:

• public limited companies (PLC);
• companies within a group headed by a PLC;
• any private company not qualifying, or excluded from being treated, as a small or medium sized company under the 2006 Act;
• any private company within a group which does not qualify as a small or medium sized group, or is within an ineligible group under the 2006 Act.

The reports of FTSE 350 companies are selected on a rotational basis.

The Conduct Committee has updated its Corporate Reporting Review Frequently Asked Questions to reflect the changes to its procedures. 

The revised operating procedures are effective from 1 April 2017.

The FRC Conduct Committee: Operating procedures for reviewing corporate reporting is available here