The FRC has issued its annual review of corporate reporting

The Financial Reporting Council (FRC) has published its annual review of corporate reporting. The FRC found that the quality of corporate reporting across the FTSE 350 companies reviewed in 2024/25 has been maintained. Also, a lower proportion of reviews this year resulted in the FRC raising substantive queries compared to previous years, with some reduction for both companies within and outside the FTSE 350.

You can read the full report here. Overall, the number of restatements prompted by the FRC’s reviews has fallen compared to the previous three years, and there has been a reduction in the number of such restatements that affect profit. 

There does, however, remain a quality gap between companies in the FTSE 350 and  

other companies with the majority of restatements continuing to arise in companies outside the FTSE 350. The FRC are undertaking a thematic review to look further into reporting by UK smaller listed companies. 

The FRC’s most frequently raised issues remain consistent with recent years with impairment topping the list for the third successive year, although no matters were identified this year requiring a restatement. 

The FRC was disappointed by the continuing number of cash flow restatements resulting from its reviews which were mainly classification errors by companies outside the FTSE 350. Another key theme was the inconsistency of information and explanations between the financial statements and other sections of the annual report. 

As the FRC has highlighted previously, in many cases its most common areas of challenge could have been identified by a sufficiently robust pre-issuance review. This remains one of the FRC’s key expectations, which it asks those with oversight of the reporting process to consider. 

The FRC’s top ten matters identified were as follows: 

Ranking	Topic	Percentage of reviews where issues were identified
24/25		24/25	23/24
1	Impairment of assets	10%	12%
2	Cash flow statements	9%	11%
3	Financial instruments	9%	10%
4	Presentation of financial statements	5%	6%
5	Revenue	5%	9%
6	Strategic report and Companies Act 2006	4%	5%
7	Judgements and estimates	3%	5%
8	Income taxes	2%	5%
9	Consolidated financial statements	2%	1%
10	Taskforce on Climate-related Financial Disclosures (TCFD), Climate-related Financial Disclosures (CFD) and climate-related narrative reporting	2%	4%