Effect of Coronavirus on financial reporting

The Financial Reporting Council (FRC) has published fresh guidance on issues arising from the Covid-19 pandemic.

The effect of the virus is being felt by economies globally and on a day-to-day level auditors and companies are encountering practical obstacles due to increasing restrictions on face to face meetings, travel and site visits.  The message from the FRC is that the priority is to maintain the quality of audits even if this takes additional time and delays reporting.  
  
Auditors will need to take the evolving circumstances into account when preparing their risk assessment, including considering how their ability to collate the required information may have been affected and whether there has been appropriate disclosure of the likely effect of the virus on the prospects of the company.  The constantly changing situation is also likely to mean re-assessment of work already undertaken being required.

Given the practical barriers emerging and the need to find workarounds, companies must plan even further ahead to allow appropriate time for auditors to undertake their review in these new circumstances and should factor extended deadlines into their internal reporting timetables, particularly in the case of group arrangements.  

Companies House has also issued guidance advising companies to take appropriate measures to ensure filings are made on time to avoid penalties and, if this is not likely to be possible, to consider applying to extend the period for filing.

UPDATE: 26 March 2020

In response to the evolving circumstances, further actions are being announced today, including (from the Financial Conduct Authority) a 2 month extension to the deadline for listed companies to publish their audited annual financial reports and (from the FRC) new guidance for companies and audit firms.  You can read more here.

Companies House have also issued a further announcement confirming that businesses will be able to apply for a 3-month extension to file their accounts, with those citing issues around COVID-19 to be automatically and immediately granted.  Applications can be made through a fast-tracked online system and should take just 15 minutes to complete.