Financial reporting rules eased to help firms cope with Covid-19 fallout
Firms have been given an extra two months to publish their results amid a raft of measures from UK financial regulators to help them weather “extraordinary circumstances” during the coronavirus crisis.
In a joint statement by the Financial Conduct Authority (FCA), the Financial Reporting Council (FRC) and the Prudential Regulation Authority (PRA), they offered listed companies a temporary extension to reporting rules and gave banks more leeway for handling debts turned sour.
Listed firms will now have six months from their financial year-end to report, compared with four months previously.
It comes after unlisted private firms were given an extra three months to file accounts with Companies House as they deal with the Covid-19 fallout.
In the joint statement, the watchdogs said: “Companies and their auditors currently face unprecedented challenges in preparing and auditing financial information.
“In these extraordinary circumstances, previous market practices relating to the timing and content of financial information and the audit work that is done must change.”
The PRA echoed recent comments by the Bank of England that the economic hit from coronavirus is expected to be “sharp and large”, but said growth is set to “rebound sharply when social distancing measures are lifted”.
The regulators said their measures would help “ensure information continues to flow to investors and support the continued functioning of the UK’s capital markets” in the meantime.
Current accounting rules mean banks are required to make provisions for bad debts as soon as credit risks appear.
But in a letter to bank bosses, PRA chief executive Sam Woods said it is vital that firms make “well-balanced” decisions and take into account government support for borrowers.
The watchdogs said they also want lenders to consider this in cases of potential breaches of lending terms, given the “common goal that the financial system should be a source of strength for the real economy during this challenging period”.