The Financial Reporting Council (FRC) has told companies to be more open about their exposure to debt-ridden or politically unstable economies.

 

The update published by the FRC calls directors to consider the effect of global economic issues when assessing companies’ positions and prospects in annual and half-yearly financial reports.

 

The FRC explains that country and currency risks have seen significant change over the last year, “of particular note are the risks arising from regime changes in the Middle East, the funding pressures on certain European countries and curtailment of capital spending programmes.”

 

Stephen Haddrill, chief executive of the FRC, comments, “Directors of companies in the UK are trying to assess the risks to their companies’ business models in difficult and rapidly changing economic conditions. The FRC is committed to promoting market confidence in corporate reporting. It has published this guidance for directors on the preparation of balanced and understandable disclosures that put their company’s position and prospects in context of the current market conditions”.