Joint statement by the Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA)

Mar 26, 2020

 

The Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and Prudential Regulation Authority (PRA) issued a joint statement in which they announced a series of actions to ensure that information continues to flow to investors and to support the continued functioning of the UK’s capital markets.  

These will be of particular relevance to our members in the UK and those with UK based clients.

The actions include an announcement by the FCA of a two-month extension to the filing deadline. Currently, under the Transparency Directive, companies have 4 months from their financial year-end in which to publish audited financial statements and so for December year ends that is now extremely close.  Under the temporary relief announced on 26 March the FCA will forbear from suspending the listing of companies if they publish financial statements within 6 months of their year-end.   This will be a welcome relief to listed companies and their auditors who need extra time to complete their annual reports. 

To further support the markets the FRC have issued guidance for companies on some of the issues presenting challenges across the board. This is complemented by guidance from the PRA regarding the approach that should be taken by banks, building societies and PRA-designated investment firms in assessing expected loss provisions under IFRS9.

Audit firms play a key role in the flow of information to the markets and the current unprecedented situation is causing practical difficulties for many auditors both in preparing accounts and carrying out audits which could add to the delays on company reporting.  The FRC has issued a Bulletin for audit firms reminding them of the need to obtain sufficient, appropriate audit evidence in order to be able to give an opinion that is not subject to a disclaimer or qualification due to a scope limitation.  This Bulletin also highlighting that it is likely that the current circumstances lead to more modified opinions in auditor’s reports, than would typically be the case.