Travis Perkins

Disclosure of judgements and estimates

At the end of 2017, the FRC published a thematic review which focused on the disclosure of critical judgements and sources of estimation uncertainty, a requirement of IAS 1 Presentation of Financial Statements. This review was carried out in part because, in its 2016-17 corporate reporting review, the FRC found that companies were not making sufficiently clear disclosures in this area.

Unfortunately, despite this, judgements and estimates still represent an area of difficulty for companies, remaining the area most commonly raised by the Corporate Reporting Review Panel in reviewing company accounts during 2017–18. Common issues include poor explanations, a failure to separate judgements and estimates clearly and discussion of judgements and estimates that were not considered by the company to be significant or material. In some cases the FRC noted that disclosures elsewhere in the accounts suggested that significant judgements were made but these were not included in or referred to in the IAS 1 disclosures.

As a result of this, the FRC can be expected to continue its scrutiny of these disclosures and to challenge companies that do not provide clear, specific disclosures that meet the requirements of IAS 1.

This report analyses the disclosures about judgements and estimates which have been included in the consolidated annual reports of 20 UK listed companies selected at random from the FTSE 350.

Travis Perkins plc Monitor

Travis Perkins plc Annual Report 2017
CR Monitor Issue: 
2018/1101
Company covered: 
Travis Perkins plc
Period End: 
31 December, 2017
Report issued on 06 November 2018 covered the following practice issues:
Change
Discussion of key audit matters included in audit report.
Change
Separate sections outlining director and auditor responsibilities included in auditors' report.
Pronouncements
Extended disclosure in respect of the impacts of new accounting standards including IFRS 9 "Financial instruments", IFRS 15 "Revenue from contracts with customers", and IFRS 16 "Leases".
Change
Disclosure of income statement information in respect of businesses acquired during the year.
Restatement
Reclassification of defined benefit pension scheme assets from Level 1 to Level 2 of fair value hierarchy.

Travis Perkins plc Monitor

Travis Perkins plc Annual Report 2016
CR Monitor Issue: 
2017/0808
Company covered: 
Travis Perkins plc
Period End: 
31 December, 2016
Report issued on 15 August 2017 covered the following practice issues:
Change
Disclosure of a new note on "revenue reconciliation and like-for-like sales".
Change
Identification of "UK decision to leave the European Union", "Legislation" and "Corporation tax" as new areas of principal risk.
Change
Disclosure of software “assets under construction” as a separate class of intangible asset.
Change
Introduction of graphical presentations to the audit report illustrating materiality and audit scope.
Restatement
Restatement of segment disclosure of capital expenditure without explanation.

Disclosure of the impacts of IFRS 16 "Leases"

IFRS 16 “Leases” will fundamentally change accounting by lessees as it requires assets previously off balance sheet under operating lease arrangements to be brought on balance sheet as is currently the case for finance leased assets. As a result on application companies will recognise both additional assets and additional liabilities. Consequently there will also be knock on effects in the income statement as operating lease charges are replaced by a depreciation charge and a finance expense. This report analyses the financial statements of a range of companies to firstly establish whether there has been any early adoption and secondly to establish what companies are disclosing in respect of IFRS 16 and its future impacts.