COVID-19 Resources

The FRC issues advice on annual reports for 2020/21 reporting season

This Need to know outlines the recent amendment to IFRS 16 Leases titled Covid-19-Related Rent Concessions beyond 30 June 2021, published by the International Accounting Standards Board (Board) in March 2021.

As the pandemic increases in both magnitude and duration, entities are experiencing conditions often associated with a general economic downturn. This includes, but is not limited to, financial market volatility and erosion, deteriorating credit, liquidity concerns, further increases in government intervention, increasing unemployment, broad declines in consumer discretionary spending, increasing inventory levels, reductions in production because of decreased demand, layoffs and furloughs, and other restructuring activities. The continuation of these circumstances could result in an even broader economic downturn which could have a prolonged negative impact on an entity’s financial results. This Need to know discusses certain key FRS 102 accounting considerations related to conditions that may result from the COVID-19 pandemic.

Key changes include clarifications on disclosures for 'Going concern' and 'Liquidity risk management', new subsections on 'Contracts to buy/sell commodities', added guidance for idle assets in 'Restructuring plans', as well as clarifications in 'Share-based payments', 'Government assistance' and 'Distributable profits'.

As the pandemic increases in both magnitude and duration, entities are experiencing conditions often associated with a general economic downturn. This includes, but is not limited to, financial market volatility and erosion, deteriorating credit, liquidity concerns, further increases in government intervention, increasing unemployment, broad declines in consumer discretionary spending, increasing inventory levels, reductions in production because of decreased demand, layoffs and furloughs, and other restructuring activities. The continuation of these circumstances could result in an even broader economic downturn which could have a prolonged negative impact on an entity’s financial results. This Need to know discusses certain key IFRS accounting considerations related to conditions that may result from the COVID-19 pandemic.

Key changes include clarifications on disclosures for 'Going concern' and 'Liquidity risk management', new subsections on 'Dividends and capital management' and 'Contracts to buy/sell commodities', added guidance for idle assets in 'Acquisitions and disposals', as well as clarifications in 'Share-based payments', 'Government assistance' and 'Breach of covenants'.

The Coronavirus Disease 2019 (COVID-19) pandemic is affecting economic and financial markets, and virtually all industries are facing challenges associated with the economic conditions resulting from efforts to address it. As the pandemic increases in both magnitude and duration, entities are experiencing conditions often associated with a general economic downturn.

This series of webcasts discusses certain key IFRS accounting considerations related to conditions that may result from the COVID-19 pandemic.

In the light of the ongoing COVID-19 pandemic, financial reporting for the first half of 2020 has been extremely challenging. This Need to know is addressed at high level executives and audit committees and takes a strategic look at what are likely to be the most common hot topics for the upcoming financial reports, whether annual or interim. The publication explains why those topics are trending and what might be some of the related tension points. It is an overview of critical accounting issues that are addressed in more detail in our Need to know on accounting considerations related to the coronavirus 2019 disease.

This Need to know addresses the amendment to IFRS 16 Leases published by the IASB in May 2020, titled Covid-19-Related Rent Concessions. This is an update of our earlier Need to know on the Exposure Draft.

This Need to know addresses the proposed amendment to IFRS 16 'Leases' set out in Exposure Draft ED/2020/2 Covid-19-Related Rent Concessions (Proposed amendment to IFRS 16) (the ‘ED’) published by the International Accounting Standards Board (IASB) in April 2020.

This publication discusses certain key IFRS accounting considerations related to the accounting for expected credit losses (ECL) that may result from the COVID-19 pandemic. The focus of this publication is for lenders and banks though much of it will be applicable to measurement of ECL in industries other than financial services.

Global responses to the coronavirus disease 2019 (COVID-19) outbreak continue to rapidly evolve. Numerous publications and announcements of developments have sprung up around the world. Since it has become more and more difficult to follow all of them, we have put together a meta-collection of collections that we found helpful and worth browsing.

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2021 financial statements will focus on. A special focus is on COVID-19 and climate-related disclosures.

The European Union has published a Commission Regulation endorsing 'Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)' issued by the IASB in March 2021.

The Secretary of State for Business, Energy and Industrial Strategy (BEIS) has adopted 'COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)'.

The Secretary of State for Business, Energy and Industrial Strategy (BEIS) has adopted 'COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)'.

The Financial Reporting Council (FRC) has issued Financial Reporting Exposure Draft (FRED) 78 'Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions beyond 30 June 2021'.

The UK Endorsement Board secretariat has published a draft UK Endorsement Criteria Assessment on the International Accounting Standard Board’s (IASB's) amendment 'Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)'.

The European Financial Reporting Advisory Group (EFRAG) has issued its final endorsement advice letter relating to the use in the European Union (EU) of 'Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)' ('the Amendment').

The International Accounting Standards Board (IASB) has published 'Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)' that extends, by one year, the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification.

The International Organization of Securities Commissions (IOSCO) has released a statement on the need for high-quality information regarding going concern assessments and disclosures during the COVID-19 pandemic.

In a supplementary meeting held earlier today, the IASB considered the feedback received on the February 2021 exposure draft 'Covid-19-Related Rent Concessions beyond 30 June 2021 (Proposed amendment to IFRS 16)' and decided to finalise the proposed extension of the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification by one year.

A new report from the Financial Reporting Lab of the Financial Reporting Council (FRC) considers how virtual and augmented reality are and might be used to expand the scope and audience for corporate reporting.

The International Accounting Standards Board (IASB) has published an exposure draft 'Covid-19-Related Rent Concessions beyond 30 June 2021 (Proposed amendment to IFRS 16)' that contains a proposed extension of the May 2020 amendment that provides lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. Comments are requested by 25 February 2021.

In a supplementary meeting held earlier today, the IASB discussed extending the practical relief in IFRS 16, which permits lessees not to assess whether particular rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and, instead, to account for those rent concessions as if they were not lease modifications.

The International Valuation Standards Council (IVSC) has published a perspectives paper 'Challenges to Market Value' that looks at the challenges in relation to the availability of market information in a pandemic world.

The Financial Reporting Council (FRC) and the Financial Conduct Authority (FCA) have published a joint statement reminding companies that extended financial information timelines continue to apply in light of the continued disruption caused by the COVID-19 pandemic.

The IFRS Foundation has issued educational material, 'Going concern — a focus on disclosure', which intends to supports companies in its implementation of the requirements related to the preparation of financial statements using IFRS Standards on a going concern basis.

The Institute of Chartered Accountants in England and Wales (ICAEW) Financial Reporting Faculty has published a guide highlighting key areas that preparers should focus on in the forthcoming reporting season.

The Financial Reporting Council (FRC) has published consolidated COVID-19 guidance for companies and auditors. The consolidated guidance supersedes all previous FRC guidance for companies and auditors.

The Financial Reporting Council (FRC) has published a letter to Audit Committee Chairs and Finance Directors, in advance of the 2020/21 reporting season, setting out its expectations for preparers of reports and accounts for the coming year.

The Financial Conduct Authority (FCA) has published Policy Statement (PS) 20/14. The Policy Statement sets out the FCA’s decision to delay by one year mandatory requirements related to the European Single Electronic Format (ESEF). The Policy Statement also provides an update on extending deadlines for the publication of financial statements by listed companies in response to COVID-19.

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2020 financial statements will focus on. A special focus is on COVID-related matters.

IASB Board member Mary Tokar and technical staff member Sid Kumar have released an article that provides an overview of the key financial reporting considerations associated with COVID-19.

The Financial Reporting Council (FRC) has issued ‘Amendment to FRS 101 – Effective date of IFRS 17’, ‘Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions' and ‘Amendments to FRS 104 Interim Financial Reporting - Going concern'.

The Financial Reporting Lab of the Financial Reporting Council (FRC) has released guidance covering some critical areas of focus for 2020 year-ends.

The Institute of Chartered Accountants in England and Wales's (ICAEW's) Financial Reporting Faculty has published guidance on how to improve disclosures when preparing accounts in accordance with FRS 102 in light of COVID-19.

The Financial Reporting Lab ("the Lab") has published its second newsletter of 2020.

The Financial Reporting Council (FRC) has issued Financial Reporting Exposure Draft (FRED) 75 ‘Draft amendments to FRS 104 Interim Financial Reporting - Going concern' and FRED 76 'Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime - COVID-19-related rent concessions'.

The International Federation of Accountants (IFAC), the Zurich University of Applied Science (ZHAW), and the International Public Sector Accounting Standards Board (IPSASB) have published a tool for governments and other interested stakeholders to apply best practices in public sector accounting when analysing COVID-19-related intervention programs.

The UK Financial Reporting Council (FRC) has published the results of a thematic review looking at company reporting since the onset of the COVID-19 pandemic.

The European Securities and Markets Authority (ESMA) has issued a public statement recommending coordination of supervisory action with regards to issuers’ accounting for COVID-19-related rent concessions.

Accountancy Europe has released a second podcast on the wider repercussions of COVID-19 for the public sector. The new podcasts discusses the long-term actions required to help overcome the effects of COVID-19.

The Financial Reporting Lab has called on investors and companies to participate in a new project on corporate disclosures on stakeholders, including statements in response to Section 172 of the Companies Act.

Accountancy Europe has released a podcast exploring how the COVID-19 crisis differs from the 2008/09 financial crisis and the wider repercussions of the global lockdown across the economy for the public sector.

Two new reports from the Financial Reporting Lab of the UK Financial Reporting Council (FRC) provide practical guidance to companies in areas of reporting that investors have highlighted as being most critical in these times of unparalleled economic uncertainty.

In response to the COVID-19 pandemic, the London Stock Exchange has announced that AIM companies can have an additional month to finalise their half-yearly reports.

The Prudential Regulation Authority (PRA) has sent a letter to chief executive officers of UK banks providing guidance on how to account for the ending of initial payment deferrals offered due to COVID-19.

The Institute of Chartered Accountants in England and Wales (ICAEW), the Institute of Chartered Accountants of Scotland (ICAS) and the Pensions Research Accountants Group (PRAG) have jointly published guidance on the implications of COVID-19 on pension scheme financial reports and audit.

The Government has introduced the Corporate Insolvency and Governance Bill in Parliament.

The European Financial Reporting Advisory Group (EFRAG) has issued final endorsement advice for 'Covid-19-Related Rent Concessions (Amendment to IFRS 16)' not even a week after the amendment was issued by the IASB.

Accountancy Europe has analysed short-term and long-term actions that could support the public sector in countering the pandemic's impact, among them many actions with regard to transparency and reporting.

The International Organization of Securities Commissions (IOSCO) has issued a public statement on the importance of disclosure about COVID-19 aspects to highlight financial reporting issues that should be considered by issuers in order to provide investors with relevant and reliable information in their financial reports and related disclosure documents.

The Financial Conduct Authority (FCA) has confirmed additional relief for listed companies facing the challenges of corporate reporting during COVID-19.

The International Accounting Standards Board (IASB) has published 'Covid-19-Related Rent Concessions (Amendment to IFRS 16)' amending the standard to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. Concurrently, the IASB also published a proposed Taxonomy Update to reflect this amendment.

As a direct consequence of the effects of COVID-19 on government entities, HM Treasury has taken the decision to reduce the financial reporting requirements for preparers of government annual reports and accounts for 2019-20.

The Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Scotland (ICAS) have prepared a guide to assist owners and directors of SME businesses in assessing going concern in light of COVID-19.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has published a statement 'Accounting implications of the impact of COVID-19 pandemic'.

The Financial Reporting Council (FRC) has updated its COVID-19 guidance for companies to explain how they should report exceptional items and alternative performance measures (APMs) in their reports and accounts in light of COVID-19.

The European Securities and Markets Authority (ESMA) has issued a public statement calling for transparency on COVID-19 effects in half-yearly financial reports.

Accountancy Europe has released a podcast exploring the repercussions of the corona crisis for corporate reporting and particularly focusing on banks. The podcast also discusses how IFRS 9 can incorporate the irregularities of the current situation and outlines other accommodations that have been made for both companies and banks to report on this period.

In a supplementary meeting today, the IASB considered the feedback it received on its 24 April exposure draft 'Covid-19-Related Rent Concessions (Proposed amendment to IFRS 16)' that contained a proposed amendment that would provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. The 14-day comment letter period closed on 8 May 2020 and the Board received 110 comment letters (including late submissions).

The Financial Reporting Council (FRC) has updated its COVID-19 guidance for companies to include considerations for those preparing interim reports.

The Institute of Chartered Accountants in England and Wales (ICAEW) Financial Reporting Faculty has published a two part guide for auditors covering COVID-19 considerations for auditing going concern, and how to report when a material uncertainty relating to going concern exists. The guide builds upon the Financial Reporting Council’s (FRC’s) March 2020 Bulletin for auditors which set out considerations for auditors in relation to COVID-19.

The Financial Reporting Lab ("the Lab") has published its first newsletter of 2020.

The European Financial Reporting Advisory Group (EFRAG) has published a draft comment letter on the IASB exposure draft ED/2020/2 'Covid-19-Related Rent Concessions (Proposed amendment to IFRS 16)'.

The International Accounting Standards Board (IASB) has published an exposure draft Covid-19-Related Rent Concessions (Proposed amendment to IFRS 16) that contains a proposed amendment that would provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. Comments are requested by 8 May 2020.

The Institute of Chartered Accountants in England and Wales (ICAEW) Financial Services Faculty has published a guide to help banks and their auditors deal with the effects of coronavirus on financial reporting under IFRS 9 'Financial Instruments'.

The Financial Reporting Council (FRC) has issued a set of answers to commonly asked questions on the challenges companies may experience in complying with statutory obligations to hold meetings and to file documentation on the Companies Register during the COVID-19 crisis.

In advance of its regular meeting next week, the IASB held a supplementary IASB meeting today to consider COVID-19-related matters: the Board's timelines in view of the COVID-19 pandemic and accounting for COVID-19-related rent concessions.

In June 2015, the European Securities and Markets Authority (ESMA) published its final Guidelines on Alternative Performance Measures (APMs) for listed issuers that became effective in July 2016. Since then, ESMA has published several questions and answers on the guidelines to promote common supervisory approaches and practices in the implementation of them. A new question has now been added to the document on the use of APMs in the context of COVID-19.

The IASB is holding a supplementary IASB meeting to consider COVID-19-related matters on Friday 17 April 2020.

The International Accounting Standards Board (IASB) has published a document responding to questions regarding the application of IFRS 16 'Leases' during the period of enhanced economic uncertainty arising from the COVID-19 pandemic. At its upcoming meeting, the IASB will discuss the matter further and will also consider effective dates, consultations periods and publication dates in general.

The International Organization of Securities Commissions (IOSCO) has released a statement on consistent application and enforcement of high-quality accounting standards which are of critical importance to the proper functioning of the capital markets — especially in times of uncertainty.

The Charities Statement of Recommended Practice (SORP) Committee has published guidance on the implications of COVID-19 control measures and charity financial reporting.

The International Accounting Standards Board (IASB) has published a document responding to questions regarding the application of IFRS 9 'Financial Instruments' during the period of enhanced economic uncertainty arising from the COVID-19 pandemic.

The Prudential Regulation Authority (PRA) of the Bank of England has released a statement 'Covid-19: IFRS 9, capital requirements and loan covenants' that offers an annex with guidance consistent with IFRS 9 to assist firms in making well-balanced and more consistent ECL estimates and in determining how to treat payment holidays and similar schemes for accounting and regulatory purposes.

The European Securities and Markets Authority (ESMA) has issued a public statement on some accounting implications of the economic support and relief measures adopted by EU Member States in response to the COVID-19 outbreak. The measures include moratoria on repayment of loans and have an impact on the calculation of expected credit losses in accordance with IFRS 9.

Accountancy Europe has released an article exploring coronavirus’ effects. In addition, Accountancy Europe is collecting all resources relevant for European professional accountants.