Reporting issues for preparers in the 2021/22 season
Steven Brice, Chair of the Financial Reporting Faculty Board, reflects on key issues for the 2021/22 reporting season for IFRS reporters. Perhaps it won't be so quiet after all?
Undoubtedly, the pendulum has swung towards the narrative reporting aspects of financial reporting in recent years and there is a clear need for enhanced disclosure on ‘front-end’ reporting matters. Investors and other stakeholders are looking for meaningful and transparent disclosure on important topics. Boards are therefore encouraged to ensure that disclosure considerations do not simply ‘slip through the net’ for another reporting season when finalising their annual reports.
While aspects of narrative reporting such as human capital reporting, diversity, business model and so on all warrant additional consideration at the current time, I would like to specifically focus on risk. Of particular interest to investors are disclosures concerning emerging risks, risk appetite (and changes thereof), risk crystallisation, mitigating factors and how risks are evolving.
There are three risk areas I expect to be near the top of board agendas in the current reporting season.