Why delay approval of annual report and accounts?

With so much uncertainty it might be difficult to finalise accounts and get an audit signed off. If no filing or covenant deadlines are coming up it may be advisable to defer the approval of your annual accounts for a short time. 

Even if your business is seeing an upturn in trade some form of delay may still be in the best interests of the company as you redeploy (remotely) inhouse financial reporting teams to help with cashflow projections. 

If you have an imminent deadline, there are ways of delaying filing

Key considerations

Balance sheet figures reflect conditions at the balance sheet date and so are unlikely to be updated. In other words, you will not be able to go back and change the accounts despite any dramatic changes in circumstances once they are filed.

Every day the Government is announcing new financial assistance packages and changing legislation. In a few weeks the repercussions of these will be more clear and will make preparing accounts easier. Companies need to take care that they are considering all the details in the government’s aid packages. Not everything will apply to all companies, particularly those which may have been in financial difficulty before the crisis.

With lockdown now in place and in light of all the current uncertainties, auditors still need to maintain their high-quality standards and so may need to modify their audit opinion if they cannot obtain the necessary assurance, including being present at stock takes or evidence of going concern. This is something companies are likely to want to avoid. 

Your finance team is likely to be tied up with more immediate management information requirements to help you navigate these difficult times. Whilst financial reporting is important (not least to provide timely information to stakeholders) the immediate priority is cash flow.

FRC, FCA and PRA advice

The Financial Reporting Council (FRC), Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are all urging companies and auditors to take the necessary time to prepare appropriate disclosures and address current practical challenges. To quote the FRC: 'Observing timetables set before this crisis arose may not give companies the necessary time to do this.' Although listed companies are particularly highlighted, non-listed companies should also consider the advice. 

The three bodies have announced a number of actions including:

  • Requested that all listed companies observe a moratorium on the publication of preliminary financial statements till 5 April. 
  • Granted a temporary relief permitting listed companies two extra months to complete their audited financial statements.
  • Requested that markets adjust to the new timetable and do not draw adverse inferences when companies move results announcements.
  • Reminded companies that 'The Market Abuse Regulation (MAR) remains in force and companies are still required to fulfil their obligations concerning inside information as soon as possible unless a valid reason to delay disclosure under the regulation exists'.
  • Reminded companies to continue to communicate with investors
  • Produced Guidance for companies on Corporate Governance and Reporting.

AIM companies

The London Stock Exchange are allowing temporary measures for the publication of annual audited accounts. AIM companies will be able to apply to AIM Regulation for a three-month extension to the reporting deadline for the publication of its annual audited accounts pursuant to AIM Rule 19. This extension will be available for AIM companies with financial year ends between 30 September 2019 to 30 June 2020.

For further information, please contact

Lee Marshall Lee Marshall

Partner, Head of Accounting and Business Advisory

Jonathon Ericson Jonathan Ericson

Partner, Head of Audit