The UK Financial Reporting Council (FRC) has
called for more information on key strategic risks of a company to
be included in financial reports.

The FRC has proposed current company narrative
reports focus primarily on strategic and major operational risks,
rather than indiscriminate lists of risks that all companies

To achieve this, the FRC will update the
Turnbull Guidance, which sets out best practice on internal control
for UK listed companies and assists them in applying sections of
the UK Corporate Governance Code (CGC). The regulator
will also consider whether changes may be needed to the UK CGC.

FRC chief executive Stephen Haddrill said this
move represents another step forward in applying the lessons learnt
from the financial crisis to improve the overall transparency of
the reporting process.

“We hope that by putting an emphasis on the
reporting of risks that could undermine the company’s strategy or
long-term viability, companies will give investors the information
they need to help them decide how to allocate capital,” Haddrill

Auditing Practices Board chairman Richard
Fleck said in the future these proposals will mean “audit
committees will report the key judgements and decisions made in the
course of preparing and finalising financial statements, and
auditors will report whether their review of the annual report as a
whole – and not just the financial statements – has revealed any
information that is inaccurate, or any other material that is
inconsistent with information they obtained in the course of their