UK Audit Watchdog says there are too few details for companies to assess feasibility


Audit Watchdog said Wednesday that a review of how London — a UK publicly traded company could survive is too detailed for the valuation to properly notify investors.

“A clear and comprehensive disclosure of these issues is especially important in the context of the COVID-19 pandemic, which has caused significant uncertainty for some companies,” the Financial Reporting Council said in a statement. increase.

Many companies have to borrow money from government schemes introduced to fill the pandemic, and some industries such as travel and hospitality have been severely hit by blockade restrictions.

“Uncertainties affecting feasibility or going concern should be clearly explained to stakeholders,” said the FRC.

Companies typically use annual reports to show how they expect to survive for up to three years and whether there are “significant uncertainties” such as the potential for debt repayment to be difficult to meet. ..

Watchdog reviewed the selection of annual reports ending in the fiscal year December 2020 to March 2021.

The FRC said the assumptions made to support going concern disclosure often lack sufficient details to support the decision.

The FRC, which also regulates how companies apply UK best-practice corporate governance codes, extends the time it takes to assess viability and provides longer-term information when possible. He said he should try to do it.

Corporate reporting and auditing are facing extensive reforms after the collapse of the company at British retailer BHS and builder Carillion questioning the quality of audits.

The UK has proposed that companies publish a “resilience statement” that covers their viability for five years instead of the three years currently most commonly used to evaluate going concerns.

Hugh Jones