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 | 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. |