1 February 2021: The Financial Reporting Council and the Financial Conduct Authority have published updated guidance for companies and auditors to ensure high-quality financial information continues to flow to users to support decision-making.

The joint guidance encourages preparers and auditors to allow more time to publish their financial accounts, making use of available flexibilities. 

The Financial Reporting Council (FRC) and Financial Conduct Authority (FCA) strongly encourage investors, lenders and other users of financial statements to take into account the unique set of circumstances arising from COVID-19.

“As the busiest period of the year for the preparation and audit of financial accounts approaches, it is paramount that investors and users of financial information continue to receive high-quality financial information”, said Mark Babington, FRC’s Executive Director of Regulatory Standards.

Babington continued: “While companies and auditors face increased challenges in preparing their accounts, the joint measures allow for additional time to ensure high-quality reporting.”

Financial measures

The FCA and FRC reminded companies of the measures that remain valid which provide some flexibility. This includes allowing listed companies an additional two months to publish their audited annual financial reports.

Companies House filing extension 

Currently, the deadline for filing any accounts with Companies House is extended by three months. While this automatic extension expires on 5 April 2021, it will be replaced with an application process to Companies House, with companies granted a discretionary three-month extension where they cite coronavirus as a factor impacting the timely completion and/or audit of accounts. 

Only one filing extension is permissible for an accounting period and the extension cannot take the filing date later than 12 months after the end of the accounting period. 

Coronavirus-related reporting

The FRC has issued a series of guidance to support high-quality reporting and disclosure of the circumstances companies have faced as a result of the pandemic, and the mitigating actions they have taken to address risks. Further guidance was also included in the FRC’s year-end letter to CEOs, CFOs and Audit Committee Chairs.

Auditor reporting

The FCA and FRC remind audit firms of their regulatory obligations to report, to the appropriate regulator, matters arising from their work on a timely basis.

Please refer to the FCA’s Dear CEO letter published in August 2020, and the FRC’s ISA (UK) 250 Section B - The auditor’s statutory right and duty to report to regulators of public interest entities and regulators of other entities in the financial sector. 

Babington added: “Companies, auditors and investors should familiarise themselves with the latest guidance during these uncertain times to ensure they are managing reporting frameworks and stakeholder expectations appropriately.”

Marianne Mau, Technical Lead at ICAEW commented: “This is a timely reminder that the annual report is an important source of information for the market and that the expectations around the quality of reporting are not diminished because of the difficulties that companies and auditors currently face.

“Given the extra pressures arising from the current levels of uncertainty and the restrictions imposed by government, companies might be advised to take advantage of the extended deadlines to allow more time for accounts preparation and audit.”

Further reading:

• Coronavirus and financial reporting: guidance for preparers of financial statements on the coronavirus outbreak from ICAEW, including advice on disclosure of risks and treatment of events after the reporting period.
• FCA and FRC joint statement on continuing measures
• FCA’s Dear CEO letter published in August 2020
• FRC’s ISA (UK) 250 Section B
• FRC Company Guidance
• Apply to extend your accounts filing deadline