FRC annual review finds continued improvement in corporate reporting

The UK’s Financial Reporting Council (FRC) has released its Annual Review of Corporate Reporting for the 2025/26 period.

The assessment found that corporate disclosure standards among FTSE 350 constituents remained steady, whilst the disparity in reporting quality between major listed entities and other businesses continued to diminish.

Furthermore, the share of regulatory reviews that prompted substantive letters of enquiry fell for the second year in succession, pointing to broader improvements across the watchdog’s risk-weighted sample.

Throughout the review period, regulatory enquiries arose most frequently around cash flow statements, financial instruments, asset impairment, fair value measurements and revenue.

To resolve these difficulties, the FRC has advised businesses to establish internal checking mechanisms to detect standard technical compliance errors.

The regulator also stressed the importance of delivering clear, unified and understandable narratives across the entire set of annual accounts and reports.

The FRC added that it seeks to assist entities, via its Corporate Reporting Review unit, as they address new and complex reporting challenges.

Looking forward, the regulator underlined that companies must ready themselves for substantial incoming reporting changes.

These upcoming developments include the adoption of IFRS 18, amendments to FRS 102, and the introduction of Provision 29 regarding material internal controls within the UK Corporate Governance Code.

FRC Supervision executive director Anthony Barrett said: “Good reporting is about more than compliance.

“By providing investors with clear information about a company’s strategy, risks and financial performance, high-quality corporate reporting supports informed investment decisions, strengthens trust in markets and contributes to long-term UK economic growth.

“This review shows encouraging signs of progress in reporting quality, and we will continue to combine risk-based supervision with constructive engagement to further promote high-quality reporting in the years to come.”

The FRC recently revised UK auditing and assurance standards to maintain alignment with global frameworks set by the International Auditing and Assurance Standards Board.