Effects of coronavirus on reporting and auditing

The Financial Reporting Council (FRC) is advising affected companies to consider Coronavirus risk disclosures.

The FRC has published guidance for companies on disclosure of risks and other reporting consequences arising from the emergence and spread of Coronavirus.

This will particularly affect companies, operating in, dependent on supply chains in, or having close trading associations with China. Depending on the extent to which this virus spreads outside of China, other companies could also become affected.

Companies should:

• consider referring to the impact in disclosures of principal risks and uncertainties;
• report any mitigating actions which may be taken alongside a description of the risk;
• assess whether the carrying value of assets and liabilities might be affected, whether additional impairment tests need to be performed and whether leases have become onerous.

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.

If you need any further information, please speak to Stella Cooper.