FRC encourages firms to utilise reporting extension
The Financial Reporting Council (FRC) is encouraging firms to make use of the extension announced by the Financial Conduct Authority (FCA) to the deadline for publication of audited annual financial reports from four to six months from the end of the financial year.
The body said that companies are facing unprecedented uncertainty about their immediate prospects in an environment which may challenge or disrupt their usual management and governance processes.
It added that this uncertainty is likely to decrease over time as more information becomes available about COVID-19, the length and extent of social distancing restrictions in different countries, access to financial support measures made available by the UK and other governments, and the impact on the economy.
The FRC added that whilst making use of the extension, companies should continue to provide information to investors on the areas of most immediate interest to them.
The FRC’s key messages to boards on corporate governance are to:
- Develop and implement mitigating actions and processes to ensure that you continue to operate an effective control environment, addressing key reporting and other controls on which you have placed reliance historically but which may not prove effective in the current circumstances;
- Consider how you 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.
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