UK PLC urged to delay preliminary financial statements

Out-Law News | 24 Mar 2020 | 12:23 pm | 1 min. read

Public limited companies in the UK have been urged to delay the publication of their preliminary financial statements by at least two weeks in light of the ongoing uncertainty stemming from the spread of coronavirus, officially Covid-19.

The Financial Conduct Authority (FCA) has written to companies that had intimated they would publish preliminary financial statements in the coming days, urging them to reconsider. That move has been supported by the Financial Reporting Council (FRC).

"The FCA strongly requests all listed companies observe a moratorium on the publication of preliminary financial statements for at least two weeks," the FCA said in a statement.

"Investors in capital markets rely on trustworthy information on the companies whose instruments they trade. The unprecedented events of the last couple of weeks mean that the basis on which companies are reporting and planning is changing rapidly. It is important that due consideration is given by companies to these events in preparing their disclosures. Observing timetables set before this crisis arose may not give companies the necessary time to do this," it said.

While issuing preliminary financial statements is common among UK PLC, it is not a legal or regulatory requirement to publish such statements. The publication of such statements in advance of fully audited financial statements, which UK PLC is obliged to publish, "is adding unnecessarily to the pressure on companies and the audit profession at this moment", the FCA said.

The FRC said: "Recent unprecedented events mean that the basis on which companies are reporting and planning is changing rapidly. It is important that due consideration is given by companies to these events in preparing all reporting. The FRC therefore encourages listed companies and their auditors to consider carefully whether they should delay other corporate reports for the next two weeks, such as interim financial statements and final audited financial statements, except where necessary to meet a legal or regulatory requirement."

According to both the FCA and FRC, the regulators are working alongside the UK's Prudential Regulation Authority (PRA) to draw up "a package of measures aimed at ensuring companies take the necessary time in these uncertain times to prepare appropriate disclosures and address current practical challenges". Further details are to be announced "shortly", they said.