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February 18, 2020

UK’s FRC provides advice to companies and auditors on coronavirus risk disclosures

By Joe Pickard

The UK’s Financial Reporting Council (FRC) has published guidance on disclosures of risks and other reporting consequences arising from the spread of coronavirus (COVID-19).

The regulator is also discussing with audit firms whether the virus affects their ability to review component audits in China and the consequences to delivering timely audit opinions.

The FRC has advised companies to consider what disclosures they might need to include in their year-end accounts, which will be relevant for companies either operating in or having close trading associations with China.

The regulator noted that companies which might not have a presence in China but have global supply chains dependent on Chinese-manufactured goods will need to consider their disclosures if their business faces possible disruption.

Discussions are currently taking place between the FRC and audit firms to assess the impact on their audits of UK listed groups with Chinese subsidiaries.

A spokesperson for the FRC said: “Given the potential for rapid spreading of the virus, required disclosures will likely change over time as more information about the epidemic emerges.

 “Companies will need to monitor developments and ensure they are providing up-to-date and meaningful disclosures to their shareholders when preparing their year-end reports.”

a spokesperson for EY UK said: "EY is closely monitoring the potential impact of coronavirus on the capital markets. We are engaged in dialogue with the relevant regulators, companies we audit, and our EY teams as necessary. Where practical, we are making alternative arrangements to complete our audit work in impacted countries."

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