The Panel of Inquiry will recommend measures, if any, which are necessary to improve the existing reporting regime and related guidance for companies and auditors in relation to these matters.
The Inquiry’s detailed terms of reference are:
“In the context of the recommendations in the FRC’s recently published discussion paper 'Effective Company Stewardship – Enhancing Corporate Reporting and Audit' to examine the particular challenges faced by directors, management and auditors where companies face going concern and liquidity risks, and to consider how such challenges should be addressed in the future. In particular, the Panel of Inquiry will examine:
- how companies ensure the adequacy, timeliness and reliability of the internal information used to monitor going concern and liquidity risks;
- how the Board and, separately, the Audit Committee approach going concern and liquidity risks, particularly in situations where these issues are of heightened importance;
- how the consideration of going concern and liquidity risk can best be incorporated into other aspects of stewardship and reporting;
- how auditors approach these matters; and
- whether the existing reporting regime and related guidance should be developed. In this regard, particular consideration will be given to whether:
- the FRC Guidance for Directors of UK Companies, 2009 addressed the needs of management and Boards of companies facing going concern and liquidity risks;
- the guidance contained in International Standard on Auditing (UK and Ireland) 570 - Going Concern should be developed in the light of lessons learned in the course of the credit crisis; and
- the going concern and liquidity risk disclosures required by IFRS, the Code and the Listing Rules provided timely and relevant information for all stakeholders.”
The Panel of Inquiry is expected to provide its preliminary conclusions in the summer and final recommendations by the end of the year. The
FRC will consider the recommendations of the Panel of Inquiry in conjunction with its consideration of responses to its paper 'Effective Corporate Stewardship'.
Press release
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