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Financial reporting considerations for audit committees in times of great disruption
We summarize and discuss relevant guidance for audit committees' consideration for financial reporting.
With the increased challenges arising from macroeconomic events such as inflation and rising interest rates, geopolitical risks, climate change developments and the continuing effects of the COVID-19 pandemic disrupting markets and businesses, sufficient attention needs to be placed on their impact on the company’s financial statements. Audit committees (ACs) play an important oversight role in ensuring that these events, trends and macroeconomic factors are adequately considered and appropriately disclosed in the financial statements where relevant.
The Accounting and Corporate Regulatory Authority (ACRA) has also emphasized the importance of these matters in its Financial Reporting Practice Guidance No. 1 of 2022 (the 2022 Practice Guidance) published on 4 November 2022. The 2022 Practice Guidance proposes areas of review focus for 2022 financial statements to guide directors and ACs in reviewing financial statements and highlights key areas where ACs should proactively engage external auditors to help enhance the quality of audits.
In this issue, we summarize and discuss relevant guidance for the ACs’ consideration.