Britain’s Financial Conduct Authority said on Saturday that UK companies should defer publishing of the preliminary financial statements by at least two weeks to enable them to better understand how their business is being affected by the coronavirus pandemic.
“The FCA will be writing tonight to companies it is aware were intending to publish preliminary financial statements in the next few days to delay their planned publications,” the watchdog said in a statement.
The watchdog said that it will come up with further measures and asked companies to announced the delay of the statements as early as Monday.
“The FCA strongly requests all listed companies observe a moratorium on the publication of preliminary financial statements for at least two weeks,” the organization said
It said that auditors and listed companies are facing additional pressure because of the practice of issuing preliminary financial statements prior to when it is required.
The watchdog said that in order to ensure that the listed companies have enough time to prepare appropriate disclosures details of a package will soon be announced by the FCA, the Financial Reporting Council, which regulates auditors, and the Prudential Regulation Authority, the Bank of England arm that regulates banks.
Following the directive form h UK government of shutting down of shops, restaurants and other public places and advising people to avoid all non-essential travel, investors expected some companies to be hit hard because of this measure and as a consequence there has been a sell off and a tumbling of the stocks markets.
The UK government has already announced that it would be paying 80 per cent of the wages of workers in the private sector in order to discourage employers to lay off staff as the government resorts to borrowings similar to war times in order to spruce up the economy while the economy shuts down due to the coronavirus lockdown. Companies should consider announcing delays in statements as soon as Monday, said rhe FCA’s interim chief executive Christopher Woolard in a letter to companies on Saturday.
“I would be grateful if you could give this request urgent consideration, discuss with your board if appropriate, and indicate today or tomorrow whether you will delay publication,” Woolard said in his letter. “Please could you also indicate if you intend to announce delay on Monday morning,” Woolard wrote.
The FCA said that investors depend for investment decisions on the financial information that companies provides about themselves and are assumed to be trustworthy and there are changes happening in the basis on which companies are reporting and planning because of the dynamic and evolving situation because of the coronavirus pandemic. Therefore more time is required for companies to make appropriate disclosures.
“Observing timetables set before this crisis arose may not give companies the necessary time to do this,” the FCA said.
Preliminary statements are issued by many companies so that investors and markets are updated in advance about the actual disclosures that are issued after being checked by outside auditors. The mandatory requirement for listed companies id to issue full audited financial statements within a time period of your months from the end of a financial year.
(Adapted from Reuters.com)