Part 2: Brexit and audit – corporate reporting considerations
Where Brexit may have a material impact on a businesses’ activities or position it is important that this is reflected appropriately in corporate reporting. This guides helps auditors consider how to approach their review of financial statements in the run-up to Brexit.
An example of extensive disclosure of a company’s Brexit-related risks appear in Next Plc’s Brexit Preparation Impact Analysis in its half-year results published in September 2018.
Larger audit firms have focussed resources internally on financial reporting issues and on what companies need to do to determine what to report, including:
- whether Brexit-related disclosures may be necessary;
- what information is likely to be needed;
- how that information can be captured.
Brexit-related risk disclosures
The FRC’s October 2018 open letter to UK listed companies describes the disclosures it expects to see in 31 December 2018 financial statements. While this is directed at listed entities, unlisted entities reporting to listed parent entities (whether in the UK or elsewhere) may find parent entities asking for this type of information. Unlisted entities may need to include these issues in their principal risk and uncertainties disclosures in any case. It is the responsibility of parent entities who are required to make these disclosures to ask subsidiaries to provide them with information needed for the purposes of the group financial statements.
Read our guide for more considerations, including cash flows and impairments and dividends. The guide also covers FRS 102 and the audit of smaller entities.
ICAEW’s Brexit guidance
This guide is part of a series intended to help auditors of SMEs deal with current Brexit-related uncertainties associated with a potential no-deal exit as they affect 31 December 2018 and 31 March 2019 audits. The series does not deal with the longer-term potential opportunities or risks associated with Brexit more widely.
Read the other guides
A range of other Brexit related resources is available in our Brexit hub.