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Coronavirus - A Timely Reminder: Updates on financial reporting - UK

  • United Kingdom
  • Coronavirus
  • Corporate

05-02-2021

Since the start of the Covid-19 pandemic in the first quarter of 2020, there have been many reminders to companies and auditors of the need, more than ever, for high quality financial information to be provided to investors and markets. That may be easier said than done given the uncertainties created by the pandemic, the complexities of the various government support schemes and the increased challenges created by remote working, particularly in relation to the risk of fraud and the ability of auditors to verify the information being provided to them.

While regulators are, of course, alive to these challenges they have made it clear that the standards of reporting during the pandemic have not changed. They have however, continued to produce guidance and statements to try and assist companies and auditors navigate the challenges they face.

FRC/FCA joint statement

Cognisant of the fact that the start of the year is a very busy time for companies and auditors, the Financial Conduct Authority (FCA) and Financial Reporting Council (FRC) issued a joint statement on 27 January 2021 to remind companies and auditors of extensions of time that they can utilise in relation to financial reporting including:

  1. Additional time for listed companies to publish financial reports

  • An additional 2 months to publish annual financial reports, and
  • An additional month to publish half yearly financial reports.

 

  1. Extended period for filing accounts at Companies House
  • The deadline for filing any accounts with Companies House has been extended by 3 months, with an expiration date of 5 April 2021.
  • Beyond 5 April 2021, on application, Companies House will provide companies an ability to apply via an application process for a discretionary 3-month extension where COVID-19 is cited as a factor in impacting the timely completion or audit of accounts.
  • Only one filing extension is permissible for an accounting period.

In addition the FCA and FRC have reminded companies of the various guidance notes and communications issued by the FRC during the pandemic commenting on the various challenges faced by companies in relation to financial reporting and how they might be approached, for example in relation to going concern and viability statements.

The full FRC/FCA joint statement is here. The FCA has also published a helpful summary of the temporary measures currently in place.

The joint statement also contains two important warnings:

  1. to listed companies- that they are still required to fulfil their obligations concerning inside information as soon as possible unless they have a valid reason to delay disclosure under the Market Abuse Regulation. The pandemic may have altered the kind of information that is material to a business’s prospects. This advice is equally applicable to any company with traded securities.
  2. to auditors – their duty to report certain information to the FCA without delay including where the audited entity is likely to be unable to continue as a going concern (see our earlier briefing here).

AIM companies

For AIM companies, the latest issue of Inside AIM (here) confirms that the temporary measures for reporting deadlines in relation to the publication of audited annual results and half-yearly reports by AIM companies will remain in place until further notice, and sets out what AIM companies need to do to take advantage of these relaxations. In summary:

  1. An AIM company can currently apply to AIM Regulation for a three month extension to the reporting deadline for the publication of its annual audited accounts pursuant to AIM Rule 19.
  2. AIM Regulation will permit any AIM companies that need extra time to prepare their half-yearly report an additional period of one month.

Comment

It has been a challenging year for businesses and the expectations of investors and regulators in respect of financial reporting for this period will undoubtably have added to the list of difficult tasks companies are having to deal with. Careful consideration of relevant guidance from the FRC and ICAEW will be vital if those expectations are to be met.

Useful links

FCA and FRC Joint Statement

FRC Covid-19 response

Inside AIM: Coronavirus – Financial reporting deadlines