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Watchdog tells UK companies to spell out business impact of coronavirus

FILE PHOTO: A woman wearing a protective mask passes empty shelves of instant noodles and canned food as people stock up on food supplies after Singapore raised coronavirus outbreak alert level to orange, at a supermarket in Singapore February 8, 2020. REUTERS/Edgar Su/File Photo

LONDON (Reuters) – Companies should tell their investors what effect the coronavirus epidemic in China is having on their business, Britain’s accounting watchdog said on Tuesday.

Annual reports for 2019 are due and companies are required by law to disclose the main risks and uncertainties to their business in a meaningful and timely way, the Financial Reporting Council said in a statement.

“We encourage companies to consider carefully what disclosures they might need to include in their year-end accounts relating to these events,” the FRC said.

The FRC said the risks could include a company having extensive operations or manufacturing in China being hit by staff shortages and production delays.

“Additionally, companies which might not have a presence in China but have significant trading links or global supply chains dependent on Chinese-manufactured goods will need to consider their disclosures if their businesses face possible disruption,” the FRC said.

Companies may need to revise valuations of assets and liabilities, perform additional impairment tests, and check whether leases have become onerous.

The watchdog said it was also in discussions with audit firms to assess the impact on their audits of UK-listed groups with Chinese subsidiaries.

Reporting by Huw Jones, editing by Sinead Cruise and Davidn Evans

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