November 20, 2025 Corporate reporting for smaller listed companies
Whether running a large long-established UK-based international conglomerate or a small newly listed company the key to good corporate reporting is essentially the same: providing a true and fair picture of the company which enables investors and others to understand its current and future prospects. Yes, the volume and nature of reports will vary according to the size and nature of the organisation but that core principle remains unchanged.
So how do smaller organisations, which may not have the same level of resources as their larger cousins, meet their true and fair corporate reporting obligations? In a bid to provide some answers the Financial Reporting Council (FRC) has undertaken a thematic review of corporate reporting for smaller listed companies. The review drew on annual reports from twenty listed companies, all of which sit outside the FTSE350.
Whilst the overall standard of corporate reporting has improved in recent years, the FRC comments that they are significantly more likely to issue a substantive enquiry letter following reviews of smaller companies than of larger organisations. Their enquiries are also more likely to result in restatements of primary financial statements although they admit only a low number of these restatements results in a re-evaluation and reporting of consolidated profit figures. The FRC also commented on lower quality reporting seen in areas such as presentation and disclosure.
The thematic review has identified and provided specific examples and guidance in respect of four key areas, each of which could help to enhance the quality of information provided to investors. They are:
- Revenue recognition. Companies should clearly articulate their accounting policy in respect of revenue streams and ensure it is consistent with the company’s business model. This should include areas such as the determination of transaction prices and the rationale behind any performance obligations.
- Cash flow statements. The mis-classification of cash flow between operating, investing and finance costs is one of the most prevalent themes identified by the FRC. Clearer explanations which tie cash flow amounts in with information disclosed elsewhere in the accounts can help to avoid errors here.
- Impairment of non-financial assets. Impairment reviews should not simply follow the pattern set in previous reporting periods but should take account of ‘reasonable and supportable’ judgements in respect of current and expected future market conditions.
- Financial instruments. The FRC expects companies to clearly describe the specific accounting policies relating to any complex financial instruments in order to provide investors and others with an insight into the long-term viability of the organisation.
Elemental’s tax and accountancy service helps companies to ensure that accounts and corporate reports are prepared to the highest standards and that disclosures meet the requirements of the reporting authorities. Contact us to find out how we could help meet your corporate reporting obligations.
