COVID-19 resources
This year, preparers face the additional demands of producing high-quality reports against the backdrop of the effects of the COVID-19 pandemic and its economic consequences. In a continually changing and uncertain economic environment, both the FRC and ESMA highlight the importance of entity-specific and transparent disclosures regarding the impact that COVID-19 has had on the performance, position and cash flows of the entity. The FRC’s Annual Review of Corporate Reporting, its letter to Audit Committee Chairs and Finance Directors, and ESMA’s Common Enforcement Priorities provide guidance on appropriate reporting and meeting investor expectations during the pandemic and highlight other areas of regulatory scrutiny that reporters of all sizes should focus on in the coming reporting season. Recent Lab reports also highlight investor expectations for reporting in the current environment. In particular the FRC expects disclosures to:
- Clearly describe the impact of COVID-19 on the company’s position and performance with quantification where possible.
- Include relevant sensitivities or ranges of possible outcomes where judgements are made on significant estimation uncertainties
- Quantify the historical effect of COVID-19 in narrative reporting in the strategic report. In doing so companies are ‘strongly encouraged’ not to disclose arbitrary splits of items between COVID-19 and non-COVID-19 but instead apply existing accounting policies for exceptional items.
- Clearly articulate the impact of COVID-19 on their business and strategies using consistent assumptions to those used in other areas such as going concern, viability, impairment testing and recognition of deferred tax assets.
- Disclose any significant judgements made in determining whether or not there is a material uncertainty in relation to going concern to be disclosed and explained.
- Describe and explain any other significant judgements and estimates made especially with regards impairment reviews.
This page includes our resources related to COVID-19. It includes links to:
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