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Coronavirus – Authorities respond to reporting difficulties - UK

  • United Kingdom
  • Coronavirus - Regulatory issues
  • Corporate


Companies are facing difficult times with reporting, audits and meetings in view of the COVID-19  outbreak. In this update we take a look at the measures that have been announced this week to assist companies. Whilst we are seeing some creative solutions from companies to holding their AGMs this year, there are still some challenges around this, and we have not, at the time of writing, seen any legislation or formal guidance from the UK Government on this.

Measures announced this week include a joint statement from the Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and the Prudential Regulatory Authority (PRA) announcing a series of actions to ensure information continues to flow to investors and to support the continued functioning of the UK’s capital markets.

This includes a policy statement from the FCA relaxing by two months the reporting timetable for listed companies. Meanwhile, separately, for AIM companies, AIM Regulation have issued an update on their reporting deadline.

The joint statement also notes that the FRC have issued guidance for companies preparing financial statements in the current environment, and guidance for audit firms addressing some of the challenges in obtaining audit evidence.

FCA, FRC and PRA joint statement

The joint statement notes the FCA policy statement on the reporting timetable for listed companies, which is further commented on below. It also notes that there are further measures which listed companies may need to take, including:

  • Delaying the filing of accounts: Companies House has issued guidance to permit a delay to the filing of accounts at Companies House by companies. While companies will still have to apply for the 3-month extension to be granted, those citing issues around coronavirus will be automatically and immediately granted an extension via a fast-tracked process. This may be relevant to their subsidiaries.
  • Postponement of audit tenders: companies are encouraged to consider delaying tenders for new auditors, even when mandatory rotation is due, noting that the FRC has the power to extend certain mandates by up to two years in exceptional circumstances. Applications should be made to the FRC.
  • Postponement of audit partner rotation: whilst key audit partners are required to rotate every five years, this can be extended to no more than seven years. This needs to be agreed by the audit committee and does not need to be approved by the FRC.

To assist auditors, the joint statement also notes that FRC will, where possible, reduce the demands on companies and audit firms, for example by pausing requests on supervisory initiatives, such as operational separation of audit practices. The UK Government is also revising the deadlines for reporting by a range of public bodies.

FCA statement of policy: reporting timetable for listed companies

The FCA has announced that listed companies have an additional period of two months in which to publish their audited financial statements. The EU Transparency Directive currently requires companies to do this within four months from their financial year end, and this is implemented in the UK through the Disclosure Guidance and Transparency Rules (DTR 4.1.3R). Ordinarily, if companies are not able to meet this deadline, the FCA expects them to request that trading in their securities be suspended. If companies do not make such a request, the FCA has certain powers to impose a unilateral suspension.

The FCA have stated that they will exercise forbearance, and provided the audited annual financial report is published within six months of the financial year end, listed companies are not expected to request a suspension, and the FCA will not take any action to unilaterally suspend the listing.

Companies are reminded of their obligations under the Market Abuse Regulation during this time.

The FCA encourages all companies that feel it appropriate to use the two month extension, noting that undue adverse inferences should not be drawn from this. The FCA is also calling for a shift in market practice on reporting calendars. Companies are urged to review their timetable for publication of financial information to ensure accurate and carefully prepared disclosures.

This announcement from the FCA follows their announcement on 21 March requesting that companies observe a moratorium of at least two weeks on the publication of their preliminary announcements. The FCA confirms that this moratorium can end on 5 April 2020.

The FCA have also published a Q&A on the policy which you can read here.

AIM companies

AIM Regulation have issued an update for AIM Companies. From 26 March, an AIM company will be able to 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. AIM companies ordinarily have six months after the end of the financial year to publish their annual audited accounts.

This extension will be available for AIM companies with financial year ends between 30 September 2019 to 30 June 2020. The request for extension must be made to AIM Regulation by the nominated adviser, prior to the AIM company’s current AIM Rules reporting deadline.

FRC guidance for companies

The FRC guidance for companies highlights some key areas of focus for boards in maintaining strong corporate governance and provides high-level guidance on some of the key issues when preparing the annual report and other corporate reporting.

On corporate governance, the FRC recommends that boards:

  • develop and implement mitigating actions and processes to ensure that they continue to operate an effective control environment, addressing key reporting and other controls on which they have placed reliance historically but which may not prove effective in the current circumstances;
  • consider how they will secure reliable and relevant information, on a continuing basis, in order to manage the future operations, including the flow of financial information from significant subsidiary, joint venture and associate entities; and
  • pay attention to capital maintenance, ensuring that sufficient reserves are available when the dividend is paid, not just proposed; and sufficient resources remain to continue to meet the company’s needs. Where the company is no longer able to pay a dividend, directors should halt any dividend and communicate as appropriate to the market.

The guidance also notes the difficulty in making forward-looking assessments and estimates when preparing financial statements and other reports, and aims to help companies make key forward-looking judgements as consistently as possible. Matters covered include:

  • the need for narrative reporting to provide forward-looking information that is specific to the company concerned and which provides insights into the board’s assessment of business viability and information on how they reached that assessment;
  • going concern and any associated material uncertainties, the basis of any significant judgements and the matters to consider when confirming the preparation of the financial statements on a going concern basis;
  • the increased importance of providing information on significant judgements applied in the preparation of the financial statements, sources of any estimation uncertainty and any other assumptions made; and
  • the judgement required to determine the appropriate reporting response to events which occur after the reporting date and the extent to which qualitative or quantitative disclosures may be appropriate.

Guidance for auditors

The joint statement notes that in order to be able to give an audit opinion, the auditor must obtain sufficient, appropriate audit evidence. However, the current circumstances create obstacles to carrying out audit procedures arising from restrictions over accessing information electronically in some jurisdictions, social distancing measures taken in many countries; and the challenges posed by the current uncertain economic environment. Given these concerns, the FRC has issued non-exhaustive guidance to auditors intended to provide practical help when carrying out audit engagements in the current circumstances.


These measures recognise the challenges that companies and their auditors face in the current reporting season. As such, regulators are showing flexibility, whilst recognising the importance of investors being provided with timely financial information.

At the moment, there is also a question as to how this interacts with the requirement for a public company to hold an AGM within six months of its financial year end (section 336, Companies Act 2006) – see our briefing here, as the accounts would typically be laid at the AGM. The recent press release from BEIS and Companies House stated that that the UK Government, in consultation with others, is looking at solutions to address the impact of COVID-19 on companies’ ability to hold AGMs and that guidance will be published in due course. At the time of writing, we await further details of how the Government might address this.

Useful links

Joint statement by the FCA, FRC and PRA

Statement of policy: delaying annual company accounts during the coronavirus crisis


Inside AIM: Coronavirus audited accounts

FRC guidance for companies

FRC guidance for auditors