CRR Case Summaries and Entity-specific Press Notices
The FRC publishes, on a quarterly basis, summaries of its findings from recently closed reviews that resulted in a substantive question to a company (‘Case Summaries’). In addition, it publishes the names of companies whose reviews were closed in the previous quarter without the need for a substantive question. No Case Summary is prepared for such reviews.
Case Summaries, which are available for cases closed in the quarter ending March 2021 onwards, are included in the table below. As, currently, the FRC is subject to existing legal restrictions on disclosing confidential information received from a company, the Case Summaries can only be disclosed with the company's consent. Where consent has been withheld by the company, that fact is disclosed in the table.
From March 2018 until March 2021, the FRC published the names of companies whose reviews were closed in the previous quarter but did not prepare Case Summaries. However, on an exceptional basis, specific cases may be publicised through entity-specific Press Notices, which can also be found in the table below.
The FRC’s reviews are based solely on the company’s annual report and accounts (or interim reports) and do not benefit from detailed knowledge of the company’s business or an understanding of the underlying transactions entered into. They are, however, conducted by staff of the FRC who have an understanding of the relevant legal and accounting framework. The FRC’s correspondence with the company provides no assurance that the annual report and accounts (or interim reports) are correct in all material respects; the FRC’s role is not to verify the information provided but to consider compliance with reporting requirements. The FRC’s correspondence is written on the basis that the FRC (which includes the FRC’s officers, employees and agents) accepts no liability for reliance on its letters or Case Summaries by the company or any third party, including but not limited to investors and shareholders.
Key
- Only a certain number of CRR’s reviews result in substantive questioning of the Board. Matters raised may cover questions of recognition, measurement and/or disclosure.
- CRR’s routine reviews of companies’ annual reports and accounts generally cover all parts over which the FRC has statutory powers (that is, strategic reports, directors’ reports and financial statements). Similarly, CRR’s routine reviews of companies’ interim reports will generally cover all information in that document. Limited scope reviews arise for a number of reasons, including those conducted when a company’s annual report and accounts or interim report are selected for thematic review or reviews that have been prompted by a complaint. In accordance with the FRC's Operating Procedures, for Corporate Reporting Review, CRR does not identify those companies whose reviews were prompted by a complaint.
- The FRC may ask a company to refer to its exchanges with CRR when the company makes a change to a significant aspect of its annual report and accounts or interim report in response to a review.
- Case closed after 1 January 2021 but performed under operating procedures that did not allow for the publication of Case Summaries.
- From the quarter ended June 2023, the FRC started identifying the auditor of the annual report and accounts, or the audit firm that issued a review report on the interim report, that was the subject of the CRR review. This information was also back-dated for closed cases publicised from the quarter ended September 2022. Cases marked N/A relate to those published prior to September 2022 or interim reviews that did not have a review opinion.’
Case Summaries
CRR Case Summaries and Entity-specific Press Notices (Excel version)
| Entity | Places for People Group Limited (3) |
|---|---|
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2024 |
| Auditor (5) | MHA |
| Case Summary / Press Notice |
Consolidated statement of financial position We identified that the format of the consolidated statement of financial position was inconsistent with the requirements of FRS 102, section 4, ‘Statement of Financial Position’ and Part 1 General Rules and Formats to the ‘Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008’ (‘the Regulations’). The company agreed to restate the consolidated statement of financial position to be consistent with the requirements of the Regulations. The company also agreed to disclose the fact that this matter had come to its attention as a result of our enquiry. Gain on debt breakage We sought to understand the accounting treatment applied to debt breakage costs, and the associated financial liability. The company explained the accounting policy applied and confirmed that there was no remaining debt breakage liability as of 31 March 2024. The company also committed to describe the accounting treatment applied in the 2024 annual report and accounts. Consolidated statement of cash flows We asked the company to reconcile certain items presented in the consolidated statement of cash flows to corresponding amounts reported elsewhere in the annual report and accounts. The company provided satisfactory reconciliations. Cladding remediations We sought to understand the accounting treatment applied to cladding remediation costs. The company provided a satisfactory response. Parent company statement of changes in equity We asked the company to explain why a parent company statement of changes in equity had not been presented. The company confirmed there were no entries to record in the parent company statement of changes in equity and that future sets of accounts will include an explanatory statement to this effect. Other group interests In response to our question about the accounting treatment applied to the investment in Ansaar Management Company (Private) Limited, the company explained that the investment was accounted for as an associate. |
| Entity | Arnold Clark Automobiles Ltd (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
This company was selected as part of our thematic review of the UK's largest private companies and, as such, only disclosures included in the scope of the thematic were reviewed. Sale of leased vehicles We asked the company to provide details of the accounting policy that it applies to the sale of vehicles which have previously been held for rental. The company provided the requested information and agreed to disclose the policy and enhance the related disclosures in its 2023 annual report and accounts. We also asked for clarification of the treatment of both rental and non-rental vehicles in the cash flow statement. The company explained how the cash flows for rental vehicles were in line with the requirements in IAS 7, ‘Statement of Cash Flows’, but acknowledged that the cash flows for non-rental vehicles should have been classified as investing, rather than operating, activities. The company agreed to restate the comparative amounts in its 2023 annual report and accounts. As the change affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention as a result of our enquiry. Cash equivalents We asked the company to explain how some balances recognised within cash equivalents were used to meet short- term commitments rather than being held for investment purposes. The company provided a satisfactory response and agreed to enhance the disclosure about these balances in its 2023 annual report and accounts. |
| Entity | Cake Box Holdings Plc (3) |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | MHA |
| Case Summary / Press Notice |
Other comprehensive income We identified a difference between the amounts of other comprehensive income reported in the Statement of Comprehensive Income (SOCI) and the Statement of Changes in Equity (SOCIE). We asked the company to explain the apparent difference, and where a deferred tax charge in respect of the revaluation of property, plant and equipment, had been recognised. The company agreed to restate the other comprehensive income comparatives in the SOCI in their next annual report and accounts to include the relevant deferred tax charge. The company also agreed to restate the comparative figures in the SOCIE to reclassify this deferred tax charge from retained earnings to revaluation reserves. As the changes affected two primary statements, we asked the company to disclose the fact that the matter had come to its attention as a result of our enquiry. Financial asset impairment We questioned why the financial asset impairment charge had not been disclosed separately on the face of the SOCI, as the amount was greater than audit materiality. The company agreed to restate the 2023 SOCI in the next annual report and accounts to show the financial asset impairment charge separately. It also agreed to disclose the fact that the matter had come to its attention as a result of our enquiry. Change in useful economic lives We questioned why a change in the useful economic lives of certain assets had been accounted for as a prior year adjustment. The company provided a satisfactory response. Franchisee deposits We asked the company to explain the accounting treatment applied to franchisee deposits. The company provided a satisfactory response and agreed to include an accounting policy in future sets of accounts. Franchise package revenue We sought to understand the way in which revenue from franchise packages was recognised. The company provided a satisfactory response. |
| Entity | CMO Group plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Saffery Champness LLP |
| Case Summary / Press Notice |
Presentation and measurement of amounts owed from group undertakings We asked the company why amounts owed from group undertakings were classified as current assets in the parent company balance sheet. The company acknowledged that a large part of the overall balance was not expected to be realised within 12 months of the balance sheet date and so should be presented as non-current assets. The company agreed to revise the presentation and restate comparative figures in its 2023 annual report and accounts. As the change affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention as a result of our enquiry. We also asked the company to provide further details of how it had complied with the requirements of IFRS 9 ‘Financial Instruments’ in determining expected credit losses on amounts owed from group undertakings in the balance sheet of the parent company. The company provided the requested information and agreed to include further detail in their next annual report and accounts regarding how the requirements had been applied to this balance. Calculation of cashflows from business combinations We queried the calculation of the cash outflow disclosed in the cashflow statement for acquisitions of businesses, based on the amounts disclosed elsewhere the financial statements. The company satisfactorily explained the basis of calculation. |
| Entity | DP Poland plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Mazars LLP |
| Case Summary / Press Notice |
Acquisition of All About Pizza d.o.o. (‘AAP’) We asked the company why the cash flow statement showed cash flows from acquiring a subsidiary, All About Pizza d.o.o. (‘AAP’), when other disclosures indicated that the acquisition was conducted via a share-for-share exchange. The company agreed to restate the 2022 cash flow statement and associated notes in the 2023 annual report and accounts to show both the acquisition and the associated issue of share capital as non-cash transactions. We also requested further details of the purchase price allocation for the acquisition of AAP, including why no deferred tax arose on the recognition of the Master Franchise Agreement (‘MFA’). The company provided the explanations requested, but acknowledged that deferred tax should have been recognised on the fair value adjustment uplift on the MFA. It proposed to correct this by way of a restatement of the comparative information in the 2023 annual report and accounts. It also agreed to provide more transparent disclosure of the judgements made by management regarding the purchase price allocation. As both of these changes affected the primary statements, we asked the company to disclose that the matters had come to its attention as a result of our enquiry. Finally, we asked for further explanation of the company’s judgement that an indefinite useful life is appropriate for the MFA acquired with AAP. The company provided a satisfactory explanation, and agreed to provide more transparent disclosure regarding the factors considered by management in making the assessment of the MFA’s useful life in future annual reports and accounts. |
| Entity | E D & F Man Holdings Limited (3) |
| Balance Sheet Date | 30 September 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
This company was selected as part of our thematic review of the UK's largest private companies and, as such, only disclosures included in the scope of the thematic were reviewed. Statement of cash flows We asked the company to clarify the composition of those net cash inflows from discontinued operations classified as investing activities in the statement of cash flows, which did not appear consistent with other information in the accounts. The company explained that cash proceeds from the sale of investments relating to the discontinued operations had been incorrectly classified within operating activities. In addition, we asked the company to explain why restricted cash did not meet the criteria to be classified as cash and cash equivalents. We also queried the rationale for deducting the restricted cash balance from the reconciliation of movements in cash and cash equivalents in the statement of cash flows when the balance already appeared to have been excluded from the opening and closing figures. The company confirmed that restricted cash met the definition of cash and cash equivalents and that it had been incorrectly deducted from the reconciliation of cash and cash equivalents in the statement of cash flows. We closed our enquiries after the company agreed to restate the comparative figures included in its next annual report and accounts. As the restatements affected a primary statement, we asked the company to disclose that the matter had come to its attention as a result of our enquiries. Parent company investments We sought clarification of the facts and circumstances that led to the impairment of an investment in the subsidiary E D & F Man Junior Finco Limited following a group re-organisation. The company explained that the restructuring was sanctioned by the courts, with the process requiring detailed external valuations, which gave rise to the impairment in the investment. The company agreed to enhance the explanation of the facts and circumstances causing the impairment in future annual reports and accounts. We did not consider further why the impairment was not recognised in an earlier period, given that any restatement would not have a significant effect on the company’s future reporting. |
| Entity | GB Group plc (3) |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Impairment testing of goodwill We sought further information about the company’s projection of growth from 2028 to 2032. For the 2023 impairment test, this assumed annual growth rates in excess of the long-run average growth rate for the geographic markets in which the company operates. The company elaborated on its disclosure of the third-party sources used and explained other factors taken into account in determining the estimated rate of growth. It acknowledged that clearer disclosure of the change in approach from prior periods, and the basis on which the estimate was considered more relevant and reliable, would have been helpful to users. In closing this matter, we recommended that the company enhance its explanation of the methodology applied and of significant changes in estimates. We also queried the sensitivity of the recoverable amounts of groups of cash-generating units to changes in the cash conversion ratio and operating margin, which appeared to be key assumptions in the value in use calculation. The company explained why it did not consider the values assigned to these assumptions to be subject to significant variability. The company agreed to clarify its future disclosure of key assumptions and to provide sensitivity analysis should the circumstances change. We also encouraged the company to disclose reasonably possible positive changes in estimated operating margins, to enhance users’ understanding of management’s view of the uncertainty involved. Impairment of parent company investment in subsidiaries We questioned the basis on which the company estimated the recoverable amount of its investment in GBG (US) Holdings LLC. The company explained its approach and acknowledged that the recoverable amount as at 31 March 2023 did not take full account of loan liabilities of the subsidiary. The company agreed to restate the comparative figures in its 2024 annual report and accounts. As this change affected the parent company’s primary statements, we asked the company to disclose that the matter had come to its attention as a result of the FRC’s enquiries. Deferred revenue We asked the company to explain apparent inconsistencies in disclosure between deferred revenue balances and the revenue recognised in the year. The company agreed to correct an error it had identified in the revenue note disclosure and enhance its presentation of movements in deferred revenue to reflect more clearly the effect of movements in exchange rates. Deferred tax on losses carried forward We sought to clarify the apparently low effective tax rate applied in the disclosure of losses carried forward. The company acknowledged and agreed to correct a disclosure error, which accounted for part of the effect. We also encouraged the company to enhance its disclosure relating to losses eligible for more than one type of tax relief, which would address much of the rest. Intercompany debt owed to and by the parent company We asked the company to explain movements in intercompany balances relating to group restructuring transactions. We received a satisfactory response. |
| Entity | James Latham Plc (3) |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice |
Parent company cash flow statement and balance sheet We asked the company for further information about certain parent company working capital movements in its cash flow statement and its presentation of the bank overdraft as part of cash and cash equivalents in the balance sheet. The company provided the requested information and concluded that:
The company agreed to restate the comparative figures presented in the parent company cash flow statement and balance sheet in its next report and accounts. As the changes affected primary statements, we asked the company to disclose the fact that the matters had come to its attention as result of our enquiry. Foreign currency derivatives We asked about the effect of foreign currency derivatives on the measurement of the company’s inventories and revenue. The company provided a satisfactory response. |
| Entity | John Wood Group PLC (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice |
Exchange movements on disposal of foreign operations We asked the Company to explain why the net exchange movements on disposal of foreign currency operations of $54.5m, which was included in the statement of changes in equity, was not included within the statement of comprehensive income. The Company acknowledged the error and agreed to restate the statement of comprehensive income, by including this amount, in its next set of accounts. Significant estimates We enquired about the Company’s estimation uncertainty disclosures relating to liquidated damages and recognition of revenue from variation orders. The Company provided a satisfactory response and agreed to enhance their disclosures in the future. |
| Entity | Keystone Law Group plc (3) |
| Balance Sheet Date | 31 January 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice |
Accrued income We requested further information about the measurement of accrued income and clarification of whether a provision against this balance was recorded. The company satisfactorily provided details of the method used to value accrued income and confirmed the amount of provision held was not material. As the method to calculate accrued income had historically proved to be accurate, we encouraged the company to reconsider whether there was a significant risk of material adjustment to the carrying amount in the next financial year that was required to be disclosed as a key source of estimation uncertainty. Alternatively, if the estimate of accrued income carried lower risk, having a smaller impact or crystallising over a longer timeframe, any disclosures provided should be clearly distinguished from those with a significant short-term effect. Expected credit losses We asked the company to explain its rationale for not presenting apparently material impairment losses on trade receivables on the face of the consolidated income statement, as required by IAS 1 ‘Presentation of Financial Statements’. Upon review, the company agreed to restate the 2023 comparative consolidated income statement in its 2024 accounts, to separately present the impairment charge, and agreed to disclose the fact that the matter had come to its attention as a result of our enquiry. Provisions We sought further information about the company’s provisions and the accounting for claims covered by insurance, which the company provided. In view of the amount of claims-related provisions, we encouraged the company to reconsider whether an accounting policy was necessary or, alternatively, if there were no material claims in the current or preceding year, to make a statement to that effect. |
| Entity | M&C Saatchi Plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice |
Cash flows on settlement of put options We asked the company to explain why cash paid on the settlement of put options, included as a staff cost in the income statement, was classified within financing activities, rather than operating activities, in the cash flow statement. We noted that these cash flows did not appear to fall within the IAS 7 ‘Statement of Cash Flows’ definition of financing activities. The company acknowledged that classification of these cash flows within operating activities would be more appropriate. Consequently, the company agreed to classify all cash payments relating to such put options within operating activities in the 2023 annual report and accounts and to restate the 2022 comparative amounts. As the restatement affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention as a result of our enquiry. Headline results We asked for an explanation of why the company’s measure of headline results excludes from staff costs amounts relating to dividends paid to put holders and put option accounting. The company provided an explanation of its rationale for excluding these items and agreed to explain this in its future reporting. |
| Entity | Sosandar Plc (3) |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Saffery Champness LLP |
| Case Summary / Press Notice |
Impairment of loan to subsidiary We asked the company to explain the circumstances relevant to a loan to its subsidiary. In the comparative period it had been disclosed as having been waived but, in the year to 31 March 2023, it was shown as outstanding but fully impaired. The company explained that the change was required as the waiver had not been formalised but the loan was considered to be fully impaired because it was expected that it would be formally waived in the future. We were not persuaded by the company’s rationale that an intended waiver would result in an impairment. However, we did not consider it proportionate to pursue the matter further. The company agreed to enhance its disclosure of credit risk associated with the loan in its forthcoming financial statements. Company’s cash flow statement In response to our query about the presentation of cash flows relating to the loan to the subsidiary, the company explained that the increase in the gross amount of the loan was omitted in error, and agreed to restate the company’s comparative statement of cash flows in the annual report for 31 March 2024. As the change affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention because of our enquiry |
| Entity | St James's Place plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Cash flows on sale of business loans to partners We requested an explanation of the basis for classifying cash flows on sale of business loans to partners as investing given that the company classifies other cash flows arising from these loans as operating activities. The company acknowledged that it was more appropriate to classify the cash flows as operating and undertook to restate the consolidated cash flow statement accordingly. As the change affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention as a result of our enquiry. |
| Entity | The Rank Group Plc (3) |
| Balance Sheet Date | 30 June 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Leases We asked the company to explain the difference between lease payments of £66.6m shown in the note of movements in lease liabilities, and £43.6m for lease principal payments shown in the cash flow statement. We also asked why the note of movements in lease liabilities showed £47.8m of additions to lease liabilities while another note showed only £19.1m of additions to right-of-use assets. The company explained the errors giving rise to these differences and agreed to restate the comparative amounts in the cash flow statement and associated notes in the 2024 annual report and accounts to:
As the latter change affected a primary statement, the company also agreed to disclose that this matter had come to its attention as a result of our enquiry. |
| Entity | Westcoast Group Holdings Limited (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
This company was selected as part of our thematic review of the UK's largest private companies and, as such, only disclosures included in the scope of the thematic were reviewed. Statement of cash flows We asked the company to explain why the interest expense on invoice discounting facilities had been classified as a financing activity when other information in the accounts suggested that the debt factoring related to a non-recourse arrangement, resulting in derecognition of the associated financial assets on factoring. The company confirmed that this interest expense related to an additional invoice discounting facility, which was an arrangement with recourse. It also explained the borrowings linked to this facility had been incorrectly classified as cash and cash equivalents in the cash flow statement and agreed to restate the comparative figures included in its next annual report and accounts. As the restatement affected a primary statement, we asked the company to disclose that the matter had come to its attention as a result of our enquiry. The company also agreed to provide additional disclosure about the with-recourse invoice discounting facility, including improved labelling of the associated borrowings, in future annual reports and accounts. |