Companies: Negligence

(asked on 14th April 2022) - View Source

Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, whether he has plans to amend Section 414C of the Companies Act and to ensure that companies do not inadvertently allow corporate directors to conceal or otherwise diminish the impacts of corporate negligence judged to be immaterial by the Financial Reporting Council Conduct Committee.


Answered by
Paul Scully Portrait
Paul Scully
This question was answered on 26th April 2022

The directors of a company have a duty to prepare a strategic report and are responsible for its contents and their judgements. The auditor is required to review the strategic report and, based on the work done during the audit of the accounts, to state whether information in the strategic report is consistent with the accounts and has been prepared in accordance with applicable legal requirements. Both the directors and the auditor are accountable to the shareholders of the company for the contents of the strategic report.

The Financial Reporting Council, through its Supervision Committee, reviews the annual reports of public and large private companies for compliance with the law. The FRC’s corporate reporting review work does not duplicate the role of directors or auditors. Directors are responsible for the judgements in the strategic report, not the FRC’s Supervision Committee.

The Government will publish a post-implementation review of non-financial reporting regulations shortly. The post implementation review will cover both the 2013 regulations, which introduced the requirement for a strategic report, and the 2016 regulations requiring reporting on environmental, social and community matters, applicable to large Public Interest Entities.

Reticulating Splines