On 1 December 2015, the FRC stated that it plans to conduct a thematic review of companies' tax reporting in order to promote transparent recording of the relationship between the tax charges and accounting profit.
The FRC stated that it intends to write to a number of FTSE 350 companies prior to their year-end informing them that the Corporate Reporting Review Team will review the tax disclosures in their next published reports. The FRC stated that the aim of this monitoring is to ensure that the quality of corporate reporting is improved.
The FRC is particularly interested in:
- The transparency of tax reconciliation disclosures and how well the sustainability of the effective tax rate is covered; and
- Uncertainties relating to tax liabilities (and assets) where the value at risk in the short-term is not identified.
The FRC also noted that companies are required to disclose the principal risks and uncertainties they face and are expected to explain the actions they propose to mitigate the impact of those risks. The FRC confirmed that the targeted review will consider the totality of the companies' reporting, including relevant disclosures in their strategic and other narrative reports, as well as the detailed accounting disclosures.
A copy of the FRC statement is accessible at:
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