FRC areas of supervisory focus for 2024/25
The Financial Reporting Council (FRC) has announced its areas of supervisory focus for 2024/2025, which are areas the FRC considers higher risk.
These areas of focus include priority sectors for corporate reporting reviews and audit quality inspections. This article is not just relevant to PIE audit registered firms licensed by the FRC, but has wider relevance to all ICAS audit firms, as ICAS Audit Monitoring will also take these areas into account when conducting monitoring visits.
Priority sectors
Priority sectors are considered by the FRC to be higher risk for corporate reporting and audit because of economic, commercial and financial pressures. The priority sectors for the selection of company accounts and audits in 2024/25 are:
- Construction and materials
- Food producers
- Gas, water and multi-utilities
- Industrial metals and mining
- Retail
The financial sector, including banking and insurance, continues to be a focus of FRC reviews.
Areas of focus
The FRC also identifies areas of public concern and instances where there’s been recurring findings in audit inspections. In response, the FRC’s programme of corporate reporting reviews and audit quality inspections will pay particular attention to the following areas:
- Risks related to the current economic environment, for example, going concern, impairment, recoverability and recognition of tax assets/liabilities.
- Climate-related risks, including Task Force on Climate-Related Financial Disclosures TCFD disclosures.
- Implementation of IFRS 17 Insurance Contracts.
- Cash flow statements.
The FRC emphasised in its announcement that the priority sectors are only one risk factor amongst the many it considers when making review selections and that companies and audits from all sectors are included in its monitoring regime. The same considerations also apply to ICAS Audit Monitoring.
For more information on the FRC supervisory refer to the FRC website www.frc.org.uk.
