On 26 March 2020, the FCA, PRA and Financial Reporting Council (FRC) issued a joint statement in which they announced a series of actions to ensure that information continues to flow to investors and support the continued functioning of the UK’s capital markets.
Such actions include:
- a statement by the FCA allowing listed companies an extra 2 months to publish their audited annual financial reports;
- guidance from the FRC for companies preparing financial statements in the current uncertain environment. 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 IFRS 9; and
- guidance from the FRC for audit firms seeking to overcome challenges in obtaining audit evidence.
In the FCA statement the regulator is permitting a delay in the publication of audited annual financial reports from 4 to 6 months from the end of the financial year. This policy is intended to be temporary and the FCA will keep it under review. The FCA also reminds firms that they still need to observe their other disclosure obligations, in particular those concerning inside information under the Market Abuse Regulation.
The FCA recognises that some companies, given the nature of their operations, may feel it appropriate to maintain the 4 month calendar, but the regulator is urging all companies that feel it appropriate to utilise the additional 2 months. The FCA also urges market participants not to draw undue adverse inferences when companies make use of the extra time which the temporary relief provides.
The FCA also refers to its statement on 21 March 2020 requesting companies observe a moratorium of at least 2 weeks on the publication of their preliminary statements of account. The FCA confirms that the moratorium can end of 5 April 2020.