Impact of lockdowns could hold up verification of financial accounts

Regulators are warning that reporting of annual results for listed companies could be delayed because of the coronavirus pandemic.

The Financial Conduct Authority (FCA) and the Financial Reporting Council (FRC) said in a joint statement on 27 January that listed companies whose financial year ended in December should use the extra time granted to them to prepare their company accounts.

Last March, the FCA said listed companies would be given an additional two months to publish their audited annual financial reports, which pushed back the publication dates from four months to within six months of financial year-end dates.

Firms were also given an extra month for publishing half-yearly financial reports, with the deadline increased from three to four months after the financial year midpoint.

The regulators said in a statement: “We recognise that we are now in the busiest period of the year for preparing, auditing and publishing financial information. This has coincided with further restrictions imposed through the recent national lockdowns in the UK. 

“Recognising the heightened challenges and in line with our previous statements, the FCA and FRC would like to encourage all stakeholders including in particular boards of listed companies to refamiliarise themselves with the measures and use them in light of any resourcing constraints in finance and/or audit teams to ensure the quality of reporting is not compromised during this period.”

The first quarter is usually the busiest time of year for financial departments and auditors.

The regulators are concerned that the impact of lockdown and the uncertain economic outlook are having a major impact on the preparation of financial accounts.

Remote working, travel restrictions, home schooling and staff sickness have all added to the pressures auditors face and have delayed the completion of accounts.

The FRC’s executive director of regulatory standards, Mark Babington said: “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.  

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

Babington added that 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.