[Global Financial Insights] FRC Issues Thematic Reviews on Investment Companies and Share-Based Payments

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:

1. Financial Reporting Council issues thematic review on investment companies and share-based payment arrangements

A thematic review is a detailed regulatory review focused on a specific topic or theme across a sample of companies. Financial Reporting Council (FRC) has issued two thematic reviews on investment companies and share-based payment arrangements, to enhance the quality of reporting. These reviews strengthen the disclosures requirements and provides investors greater confidence in the quality of financial reporting. FRC has reviewed the common pitfalls and highlighted the importance of clarity and consistency in financial reporting, especially in areas where judgement and complex valuation models are involved.

(a) Share based payment thematic review

The share based payment thematic reviews discusses on companies application of IFRS 2, Share Based Payment. This standard requires judgement and modelling in employee compensation packages while valuing share-based transactions. FRC identified that there is no uniformity among the companies regarding the policies and disclosures of share based payment transactions which ultimately resulted in inconsistencies in disclosures. Considering all these, FRC issued the thematic review on share based payment.

The thematic review on share based payment discusses about the classification of share based payment, measurement and recognition of share based payments, share based payment transactions among group entities, tax associated with share based payments, completeness and conciseness of IFRS 2 disclosures, other IFRS 2 associated disclosures and consideration for private companies.

(b) Investment companies thematic review

The investment companies thematic reviews discusses about the reporting done by investment trusts, venture capital trusts and other closed-ended investment entities. FRC has identified the inconsistencies regarding the fair value measurements in the financial statements of these entities. Considering this inconsistencies, FRC has set out key recommendations and areas for improvement including improved disclosures around the quantification of significant unobservable inputs and assumptions, and related sensitivities, for fair value measurements.

Furthermore, the thematic review on investment companies discusses about the fair value measurement, strategic report, alternative performance measures, significant accounting judgements, and key expectations.

Source – Financial Reporting Council

2. Roundtable invitation by Financial Reporting Council on annual review of corporate governance reporting

The Financial Reporting Council (FRC) invites stakeholder to take part in a roundtable discussion. In its recent publication, FRC has invited stakeholder for roundtable discussion on annual reviews of corporate governance reporting. FRC aims to produce interesting and useful annual reviews of corporate governance reporting for which it is seeking review from its stakeholders on what they find particularly useful about FRC’s current review process and publication, and what they want to see more or less of in future reviews.

The roundtable session will be held on 18th November, 2025. Stakeholder may express their interest in joining the roundtable via e-mail.

Source – Financial Reporting Council

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