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Coronavirus - FRC Lab publishes new reports on guidance for reporting - UK

  • United Kingdom
  • Coronavirus - Regulatory issues
  • Corporate



On 15 June 2020, the Financial Reporting Council (FRC) Lab published two new reports providing practical guidance for companies in areas of reporting that investors have highlighted as being most critical in the current economic uncertainty presaged by the COVID-19 pandemic.

The first report focuses on the areas highlighted in the infographic published by the FRC Lab in March 2020 on reporting on companies’ resources, actions and future decision-making during times of uncertainty Repand the second report  focuses on disclosures relating to going concern, risk and viability during the COVID-19 crisis. The FRC has also published summaries of each report.

FRC Lab report on resources, actions and the future

The FRC Lab report on resources, actions and the future details the FRC Lab’s findings as a result of speaking to investors about the types of information they require from companies to assist with their understanding of the short-term impact of COVID-19 as well as the evolving, longer-term impact on companies’ strategies and business models in the context of the considerable uncertainty generated by the crisis.

It seeks to provide detailed guidance to companies, as well as useful examples and precedents of the types of disclosures made by companies (and explanations as to why they are useful), in the areas covered in the infographic published by the FRC Lab in March 2020 on reporting on companies’ resources, actions and future decision-making during times of considerable uncertainty. These areas are as follows:

  • Resources (including the availability of cash): In this area, key questions relate to how much cash the company has and what cash and liquidity a company can obtain in the short-term.
  • Actions to manage short-term expenditure and ensure viability: In this area, investors want to understand what companies are doing to manage expenditure and cash outflow and what other actions are being taken to support viability as well as the ability of management teams to adapt to the evolving economic and operational environment over the longer-term in terms of capital deployment and changes to capital allocation.
  • The future: This area relates to how decisions taken now ensure the sustainability of companies and impact customers, suppliers and employees.

The report then discusses the types of disclosure in each area that companies should be thinking about, whether that be as part of their annual reporting cycles or in market updates (whether by way of regulatory announcements or via their websites) outside of that, emphasising that whilst it may place a burden on companies, it is important for them to ensure that accurate and sufficiently detailed information is provided to investors at the appropriate time and to take account of the likely level of market understanding of their current position and the actions that they are taking.

Of the above areas, none is more important than the others and an area or areas will necessarily be more important to some companies than others depending on their particular circumstances. However, understanding a company’s cash and debt position is generally always key in the short-term and then this evolves into more of a focus on operations and strategy and how companies are preparing for the future in a post-COVID-19 world over the longer-term.

The report finds that investors are not so much interested in lengthy, generic boilerplate disclosure but rather prefer a more considered focus on what is important to a particular company and the specific environment in which it is operating. To assist with this, the FRC has provided throughout the report, in each of the areas referred to above, annotated examples of various disclosures made by companies, explaining what aspects of them the FRC considers to be useful to investors in obtaining an understanding in the relevant area and why.

The report also includes specific discussion of dividends and dividend policy and notes that what investors are looking for in this area is clear disclosure on the factors influencing decision-making in this area and compromises made, even if that results in them not changing their dividend policies in response to the crisis.

FRC Lab report on going concern, risk and viability

The level of uncertainty that the COVID-19 pandemic has given rise to means that it is challenging for companies to make meaningful disclosures to investors that cover going concern, risk and viability. The FRC’s report on this topic, like its report on resources, actions and the future, seeks to provide useful examples of how companies are meeting these challenges based on discussions with investors and sets out the relevant regulatory requirements, key considerations for companies to be aware of and a number of questions for boards as well as details of investors’ expectations of companies in terms of reporting and disclosure in these areas.

Key take-aways from the report include the following:

  • It is likely that more companies will include one or more material uncertainties in their going concern reports. However, a company can nevertheless be a going concern even with such material uncertainties. Investors recognise that the current level of uncertainty brought on by the pandemic is unprecedented and, in many cases, outside of companies’ control.
  • Companies should consider whether they should update their risks for the half-year disclosures. The best and most useful disclosures to investors are likely to consider the situation facing companies as a result of COVID-19 in its entirety and then look at a company’s specific circumstances in that context.
  • For investors, disclosures relating to risks that are specific to the company and its operations are what are most important. Therefore, while for some companies, COVID-19 may be a principal risk, for others it will not. However, for many companies, COVID-19 is likely to have had at least some impact, at least in certain areas, so relevant risks may not be COVID-19 itself but rather its impact on supply chain, cyber security, financing or health and safety etc.
  • Viability statements, which were created as a response to the financial crisis in 2008, can provide useful information and statements with realistic scenarios, clear assumptions and sensitivity analysis can be used to help underpin a board’s view of its long-term prospects.



The two reports produced by the FRC Lab are designed to give companies some practical guidance on managing investors’ expectations on reporting and disclosure in the uncertain, constantly evolving economic and operational environment the COVID-19 pandemic has given rise to and ensuring that their disclosure and reporting is as useful as possible in informing investors’ decision-making processes.


Whilst recognising that adequate reporting and disclosure in the developing situation is likely to require companies to expend more resource and effort than they perhaps would have done before, the FRC has provided some useful assistance with specimen disclosures as well as highlighting specific elements of uncertainty relevant to the next 12 months that companies may need to focus on in their reporting and which they should be using to inform the disclosures that they make.

Useful links

FRC press release

Report 1


Summary of Report 1

Report 2

Summary of Report 2