FRC 2026 Annual Review of Corporate Reporting

On 29 September 2026, the Financial Reporting Council (FRC) published its Annual Review on Corporate Reporting (the Review). 

The Review covers cases opened by the FRC in the twelve-month period to 31 March 2026, i.e. it generally relates to companies with year-ends between December 2024 and November 2025.

What is the FRC’s opinion on corporate reporting in this period?

Overall, the FRC is encouraged by the standard of reporting.

• There was a reduction in the proportion of reviews resulting in substantive enquiries.
• The quality of reporting amongst FTSE 350 companies was maintained.
• The gap in reporting standards between FTSE 350 companies and other companies has narrowed.

The FRC has, however, identified areas for future improvement, as detailed below.

The FRC also asks “how much is enough?” when companies are working through their reporting obligations. This is a reminder to preparers that the UK framework is principles-based and so requires judgement: high quality reporting does not necessarily require a high volume of disclosure.

What were the points which the FRC identified for improvement?

The FRC provided a list of the top five issues.

1. Cash flow statements

The main problems related to the classification of cash flows (for example, dividend payments being classified as investing, rather than financing or operating activities) and inconsistencies between amounts or descriptions in the cash flow statement and information elsewhere in the annual report and accounts.

The FRC refers preparers to the guidance in its 2020 thematic review of Cash flow and liquidity disclosures, which includes a list of the consistency checks its reviewers perform, as well as its 2025 thematic review of Reporting by the UK’s smaller listed companies and its 2024 thematic review of Offsetting in the financial statements.

2. Financial instruments

There were instances of incomplete and non-specific disclosures of the relevant accounting policies and financial risks, so companies are urged (amongst other things) to ensure that sufficient information is given to explain all material financial instruments.

The Review notes that this area will be considered further in the FRC’s 2026/27 thematic review of “Financial instruments reporting by corporates”, which will focus on hedge accounting, expected credit losses (ECLs) and debt factoring arrangements.

3. Impairment of assets

Clarification was also sought on some of the key inputs and assumptions relating to the impairment of assets as well as the methodology, impairment indicators and events and circumstances which led to the reversal or recognition of an impairment.

4. Fair value measurement

The majority of queries in this context related to unclear explanations of how companies had applied the requirements of IFRS 13 to their fair value measurements and of the valuation techniques used. 

The FRC notes that guidance on this topic is available in its 2023 IFRS 13 thematic review report.

5. Revenue

Queries on revenue largely related to the accounting policies and significant judgements applied.

Again, the FRC points to further guidance in its 2019 thematic review of IFRS 15 Disclosures and 2020 follow-up report, as well as its 2025 thematic review of Reporting by the UK’s smaller listed companies and its 2024 thematic review of Reporting by the UK’s largest private companies.

Were there any other important issues raised?

Yes, the FRC highlighted some additional areas for improvement beyond the five topics noted above.

• Reporting on provisions and contingencies.
• Companies’ assessment of “control”, and in particular whether they have control of another entity, joint control of an arrangement or significant influence over another entity.
• In respect of Task Force on Climate-related Financial Disclosures (TCFD) reporting, explanations of performance against objectives and the basis for not disclosing material Scope 3 emissions. Similarly, there has been insufficient detail about which emissions were covered by certain metrics and the climate-related key performance indicators relevant to Climate-related Financial Disclosures (CFD) reporting.

Note: the UK Sustainability Reporting Standards (UK SRS S1 and UK SRS S2) were issued in February 2026. The Financial Conduct Authority (FCA) consulted earlier this year on replacing its current TCFD-aligned Listing Rules with requirements for in-scope listed companies to report against these standards. The FCA is currently reviewing the feedback and aims to publish a policy statement later this year.

• The prominence, labelling and reconciliation of Alternative Performance Measures.
• Clear classification of assets and liabilities as current or non-current in the balance sheet.
• Various points in the context of structured digital reporting, including (amongst other things) consistent tagging, appropriate use of custom extensions, anchoring of extensions to the most appropriate or sufficiently precise base elements, and timely filing with the National Storage Mechanism.

The Government has recently launched a consultation on modernising corporate reporting. Does the FRC express a view on this?

Yes, in the Review the FRC confirms that it supports the Government’s ambition to modernise corporate reporting and welcomes the consultation to ensure that UK corporate reporting remains proportionate, effective and fit for the future. The Burges Salmon team has published a short series of posts on this topic; see the “Insights” section of our Corporate advisory and governance webpage for further information.

Is there anything else that the FRC thinks companies should consider in relation to their future corporate reporting?

The FRC sets out a list of its key expectations as companies prepare their next annual reports and accounts. Whilst not exhaustive, the list provides an overview of common areas for improvement.

1. There must be a robust review process to identify common technical compliance issues.
2. Effective oversight and control must be maintained when AI is used in the corporate reporting process.
3. The annual report and accounts, as a whole, must tell a consistent and coherent story across the narrative reporting and the financial statements, and must be clear, concise and understandable.
4. Accounting policies disclosed must be sufficiently company-specific and include all material and relevant information.
5. The strategic report must include a fair, balanced and comprehensive review of the company’s development, position, performance and future prospects.
6. Where relevant to the particular company, findings from the FRC’s various thematic review reports must be considered.
7. There must be sufficient assessment of, and preparation for, any upcoming changes in reporting standards.

More specifically, the FRC notes that extensive changes are coming with the implementation of IFRS 18, ‘Presentation and Disclosure in Financial Statements’, for periods beginning on or after 1 January 2027.

The FRC also notes that new Provision 29 of the UK Corporate Governance Code will apply for the first time to periods beginning on or after 1 January 2026. This will require boards to make a declaration, on a comply or explain basis, in relation to the effectiveness of their material internal controls.

For further information about any of the points raised in this article, please reach out to your usual Burges Salmon contact or to AJ Venter (Corporate and M&A) or Charlotte Hamilton (Corporate and M&A).

Proportionality and materiality are carefully considered at every stage of our review work. We are mindful of our duties to support UK economic growth and protect stakeholders in the public interest, by promoting high standards in corporate reporting while avoiding disproportionate impact on those we regulate.

https://media.frc.org.uk/documents/Annual_Review_of_Corporate_Reporting_2025-26_z5sPutOW.pdf