Submission to UK FRC on Implementing the Recommendations of the Sharman Panel

  • Date:07 Jun 2013
  • Type:Policy Submission
On 7 June 2013, the Australian Institute of Company Directors lodged a submission in response to the United Kingdom’s Financial Reporting Council’s consultation paper, Implementing the recommendations of the Sharman Panel (Consultation Paper).

In summary, Company Directors comments are as follows:

a) We are concerned that the proposals set out in the Consultation Paper significantly change expectations about the director’s assessment of going concern and liquidity risk.

b) We are concerned that the proposals set out in the Consultation Paper may significantly increase the potential liability of directors for the disclosures that they are required to make around their assessment of going concern.  Thus, the need for adequate and appropriate safe harbours and an extended business judgment rule for forward looking information.

c) The recommendations set out in the Consultation Paper fail to recognise that despite the best efforts of the board and its directors any forward looking considerations are uncertain and they are unable to reliably predict the future outcomes. 

d) The considerations set out in the Consultation Paper have the potential to broaden the expectation gap, particularly with respect to the responsibilities of the directors and auditor’s in assessing liquidity risk and the ability of the company to continue as a going concern for the foreseeable future.

Download the above policy submission (PDF 1 MB).