Covid 19 update 9 April 2020
09 April 2020
As you will be aware from our note of 17 March, FRC staff have been working from home during the Covid 19 crisis. We have heeded advice from health professionals and the government, and have decided to extend our ‘stay at home’ period until at least 4 May. We will continue to review this situation in line with official instructions.
We will continue to monitor the impact of Covid 19 on governance, reporting and auditing developments to identify if we need to update further the guidance we issued on 26 March for companies and auditors, and on 27 March for AGMs. We published a statement on 1 April from the Pre-Emption Group recommending investors support issuances of up to 20% during this period.
We are maintaining business as usual as much as possible across our range of activities.
Our Audit Quality Review team continues to finalise its inspection work for our 2019/20 cycle with the aim of publishing the results in July for the largest audit firms and in the autumn in the Developments in Audit publication. For our 2020/21 inspection and supervision work, including the ongoing work through our Audit Firm Monitoring and Supervision approach in our AFMAS team, we have worked with audit firms to reduce the regulatory demands on them during this crisis. We have extended timetables to respond, our staff are working remotely and only proceeding with individual elements of our work in the short term where we have the express agreement of the firm that the work is manageable for the audit firm’s partners and staff.
The Corporate Reporting Review team continues to correspond with companies on issues under discussion as at 26 March but has paused issuing new letters to companies. We are mindful that companies may face challenges in providing timely responses. Work has commenced on a number of thematic reviews.
We continue to progress investigations and enforcement action while taking the current situation into account when requesting information and documents, and in responding to requests for timing extensions.
The Financial Reporting Lab is focusing on providing insight into emerging reporting issues arising from Covid 19 and reviewing climate-change reporting under TCFD to contribute to the FRC’s wider thematic review. It will bring forward a review of s172 statements to identify good practices in reporting but pause the project on business models, strategy and the longer term.
The Corporate Governance and Stewardship Team continues to engage with companies, investors and other stakeholders to understand the most important issues affecting them. We are working alongside Government and other regulators to identify and overcome unnecessary burdens and barriers so that companies and investors can continue to achieve effective and high quality governance and stewardship.
The Professional Oversight Team continues to work with BEIS on preparations for equivalence and adequacy negotiations with the EU and in developing the post Transition Period regime. We have offered the professional bodies we oversee a month’s pause from meetings with us and from responding to requests for information during that period.
The FRC continues to make progress on the recommendations of the Kingman, CMA and Brydon reviews to ensure our plans are well advanced by the time BEIS publishes its consultation on audit market reform.
Recognising that stakeholders face challenges during this period we have paused requests for participation on projects and the publication of additional consultations unless they are required to meet legal, regulatory or international obligations. Where new material is issued, we are reviewing the effective dates, and will consider extensions to those dates if the period of uncertainty is further extended. We have also paused demands on, requests from and meetings with audit firms on operational separation. We will review these decisions in one month. We have also postponed until January 2021 the FRC’s internal governance changes which were announced in the recently published Plan & Budget for 2020/21.
We will keep the situation under review and update stakeholders on anything that changes as and when necessary, including whether we need to extend this timeframe.
In the meantime, we thank you for your patience and understanding. The FRC switchboard is unavailable during this time so please email your usual contact or email@example.com