The FRC has published an update of its thematic review of judgements and estimates. The first thematic review in this area was published in 2017 and this updated publication was produced due to the frequency with which issues in relation to the topic continue to be identified. This publication also includes guidance on topical matters such as climate change.
The disclosure of judgements and estimation sources form a key part of the financial reporting process and continues to be an area of focus and challenge for preparers. The report highlights that good disclosure of judgements and estimates should be tailored to a company's specific circumstances and should explain, in sufficient detail, the judgements and assumptions made. Sources of estimation uncertainty should be quantified and other relevant information such as sensitivities or ranges of potential outcomes should be provided where these help readers understand management’s judgements about the future.
In order to assist preparers, the review identifies many good examples of detailed disclosures relating to judgements and estimates. It also identifies some areas where there is room for improvement.