Statements about the short-term viability of companies are resource-costly and benefit-cheap, argues Jon Moulton.
The current UK reporting season is showcasing the Financial Reporting Council’s (FRC) latest creation – the viability statement. Essentially, boards have been given the task of assessing the risks, volatility and financing of their businesses. They then must estimate how long it is safe to assume that the company can continue to pay its creditors.
Without any visible effort to carry out a numerical cost/benefit assessment of the impact this might have on businesses, this viability assessment has become part of the required disclosures of larger UK public companies.
I have railed against this. However, I’m up against the voices of the corporate governance industry.
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