Pandemic forces FCA to request financial disclosures delay

Writes Mike Sheen

The “unprecedented events” surrounding the coronavirus pandemic have forced the Financial Conduct Authority (FCA) to request that companies delay the publication of preliminary financial statements, many of which were due over the coming days.

 In a statement published late on Saturday night (21 February) the regulator asked firms to observe a moratorium on publication “for at least two weeks” as the “basis on which” firms are reporting is “changing rapidly” and it is therefore important that “due consideration” is given when preparing those disclosures.

The practice of issuing preliminary financial statements is common among UK-listed companies with the requirement that they publish full audited financial statements within four months of the financial year end.

The FCA itself was forced last week to delay its own ongoing consultations and calls for input to 1 October and reschedule “most” other planned work as a result of the coronavirus outbreak.

“Listed companies and the audit profession are facing unprecedented practical challenges during the Coronavirus crisis,” the FCA said, adding that continuing to issue preliminary financial statements in advance of the full audited financial statements is “adding unnecessarily to the pressure on companies and the audit profession at this moment”.

The regulator also confirmed it is currently in talks with the Financial Reporting Council and the Prudential Regulation Authority about a package of measures, which would ensure that firms “take the necessary time” to prepare appropriate disclosures and address current practical challenges. The three bodies intend to announce details shortly.

However, the FCA also stressed that Market Abuse rules remain in force and listed companies are still required to announce inside information to the market as soon as possible.

The FCA said: “Investors in capital markets rely on trustworthy information on the companies whose instruments they trade. The unprecedented events of the last couple of weeks mean that the basis on which companies are reporting and planning is changing rapidly.

“It is important that due consideration is given by companies to these events in preparing their disclosures. Observing timetables set before this crisis arose may not give companies the necessary time to do this.”